DENVER — A local property management company will pay the state roughly $1 million after an investigation found the company illegally charged tenants for minor repairs and other services.
An investigation found that Four Star Realty, a Boulder-based property management company, often charged tenants for damages they did not cause, billed them for unnecessary work and charged fees that were not stipulated in leases.
The majority of the money paid to the state will go toward repaying tenants, according to Colorado Attorney General Phil Weiser, who announced the settlement on Tuesday.
Weiser said the company cooperated with the investigation and altered its business practices. The case was referred to the attorney general’s office by 20th Judicial District Attorney Michael Dougherty.
“Too often, renters are nickeled and dimed and misled by property managers and landlords. When renters move out there at a particularly vulnerable time and their security deposits often are not returned to them as the law requires,” Weiser said during a press conference. “What this settlement does is provide significant monetary relief in the form of restitution and refunds for consumers who were mistreated and will now get money put back in their pockets.”
As part of the settlement, Four Star will also disclose all fees, rents and other costs in leases and comply with a new state law related to utility billing.
The investigation found, according to Weiser, that tenants were asked to pay a $50 “move-out coordination fee” that was not stipulated in leases. Some had to pay for re-keying of locks even though Four Star had switched to a key fob system that was easy to change.
“What this consent judgment stands for today is that landlords can't charge fees that weren't disclosed in the first place. Landlords can't charge fees for things that were not actually caused by or damaged by tenants,” Dougherty said at the press conference.
Four Star also must keep photos and records of property inspections, documentation on holding security deposits and provide those records to tenants on request. The company is required to minimize costs for small repairs, such as filling nail holes.
Four Star will provide a list of tenants who moved out of properties between January 2020 and Dec. 1, 2023. A process to provide refunds to affected tenants will be announced later. Four Star manages 5,000 units across the state and has 130 employees, according to the company.
This is the first such action taken by the attorney general’s office since a 2022 law was enacted giving the attorney general the power to enforce both civil and criminal actions related to housing. The office also established a Housing Unit. Tenants who feel they were unfairly treated by landlords can contact that unit here.
“I want to underscore the significance of this legislation because it gave our office, for the first time, authority in this area, and in this case, for the first time, we are exercising that authority,” Weiser said. “That makes this case a call to action. A call to action for landlords, for property management companies and those who work with them and represent them. As Four Star grew, they failed to build the proper systems to ensure that they were complying with the law.”
Four Star Realty released a statement Tuesday denying many of the allegations made by the state, including that it improperly withheld security deposits. The settlement also states that Four Star entered into the judgment to avoid further inconvenience and the cost of litigation.
“In addition to fact-specific disputes about certain properties, Four Star Realty also disputed the state’s interpretation of legal requirements for the industry. Nonetheless, rather than spend years of expensive litigation defending itself, Four Star Realty decided to put this matter behind it and instead focus on its business, including developing industry-leading processes and controls,” the statement read.
Four Star Realty CEO Caldwell Sullivan said the company has been committed to following industry standards.
“However, in a time of progressive tenant advocacy that is quickly changing the landscape of property management in Colorado, we experienced scrutiny in this investigation for practices that are widely used in the industry,” Sullivan said in a statement. “Industry standards will undergo many changes as a result of these policy decisions. We look forward to leading the industry in adapting to those changes.”