Colorado property manager will pay $1 million settlement for charging tenants unlawful fees
This story by Lindsey Toomer appeared in Colorado Newsline on January 9, 2024.
Colorado Attorney General Phil Weiser, left, and Boulder District Attorney Michael Dougherty announced a $1 million settlement with a Colorado property manager for unlawful charges to tenants Tuesday, Jan. 9, 2024 at the Colorado Bar Association office in Denver. (Lindsey Toomer/Colorado Newsline)
A Colorado property management company will pay a $1 million settlement after improperly charging tenants, particularly college students in Boulder, a variety of undisclosed fees.
Colorado Attorney General Phil Weiser and Boulder District Attorney Michael Dougherty, both Democrats, announced a settlement with Four Star Realty that the property manager agreed to, requiring not only $1 million for restitution but also a commitment to improved business practices.
“Too often, renters are nickeled and dimed and misled by property managers and landlords,” Weiser said Tuesday at a press conference at the Colorado Bar Association office in Denver. “When renters move out, they’re at a particularly vulnerable time and their security deposits often are not returned to them as the law requires.”
The settlement comes after Dougherty’s office heard multiple complaints about undisclosed fees and unethical practices particularly from University of Colorado Boulder students and their families. Dougherty said Four Star manages about 4,600 properties in Colorado across Boulder, Fort Collins, Greeley and Denver.
An investigation by Weiser’s department found Four Star repeatedly charged tenants for typical wear and tear along with other damages they did not cause, charged fees not included in lease agreements, and billed tenants for unnecessary work and repairs. Weiser said Four Star complied with the investigation and committed to fixing its unlawful practices, which a consent decree now requires.
“For the property managers and landlords paying attention, this is a wake-up call,” Weiser said. “You need to look at your business practices. You need to evaluate whether you are following the sorts of compliance that are mandated in this consent decree.”
Four Star will provide Weiser’s office with a list of tenants who moved out of a Four Star property between January 2020 and December 2023, and Weisier’s team will then work to track down former tenants who would be eligible for restitution payments. Weiser encouraged tenants who think they’ve been mistreated to reach out to his office, but if someone doesn’t reach out they can still be contacted and receive the money they are owed.
The settlement marks the first enforcement of a 2022 law establishing a Fair Housing Unit within the Department of Law meant to ensure that property managers and landlords don’t illegally withhold security deposits. Dougherty said property managers cannot charge former tenants for improvements landlords complete only to maintain or increase the value of the property for future tenants.
“It’s important to remember that security deposits are the property of the tenant — not the property of the management company or the property owner — it’s the property of the tenant,” Dougherty said. “That’s held in trust by the property owner. Landlords are not permitted to use that unless there’s actual cause to do so, and under the law in the state of Colorado, normal wear and tear doesn’t qualify as actual cause.”
Four Star said in a statement that it denies “many of the factual allegations made by the State, including that it engaged in a course of conduct to improperly withhold security deposits.” The statement cited language in the settlement where Four Star denies any wrongdoing and entered the consent decree to “avoid further inconvenience and costs of potential litigation.”
“Four Star Realty has always been committed to following industry standards,” Caldwell Sullivan, CEO of Four Star Realty, said in a statement. “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. 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.”
Weiser announced another $1 million settlement with Wyatt’s Towing in December. The attorney general said both recent settlements are about maintaining fair consumer practices. He said in both cases, customers who knew how to advocate for themselves were treated lawfully and received their money.
“Most renters, however, aren’t in a position to do that,” Weiser said. “They don’t have the time or the training or the patience. They get mistreated.”
Dougherty noted that with many of Four Star’s tenants being college students, sometimes they will leave town after their lease agreement ends without giving their former leases any additional thought, meaning they paid fees charged unlawfully and didn’t think to argue otherwise.
Weiser and Dougherty encouraged tenants who think their landlord or property manager violated their rights to report it to the attorney general’s office. Both said their offices will work to ensure other cases where tenant rights are violated will be investigated, and the Four Star settlement won’t be the only one to come from the work of the new Fair Housing Unit.
“This clearly is a message that what Four Star is now doing and what they have in place has to be followed by other property owners and property managers,” Dougherty said.