A Front Range property management company has agreed to pay about $1 million to the state after illegally billing tenants for standard apartment services like repairs, the Colorado Attorney General’s Office announced Tuesday.

Boulder-based Four Star Realty reached the settlement with Attorney General Phil Weiser after an investigation by the Colorado Department of Law exposed multiple instances of the company charging renters for unnecessary work, unrelated damages and other fees not outlined in their leases.

The settlement marks the first time the Department of Law has taken action since a state law went into effect in May 2022 that allowed the attorney general to investigate potential legal violations of housing laws and to utilize civil and criminal enforcement actions. The law also formed the fair housing unit within the agency.

Four Star manages 5,000 rental units in Boulder, Denver, Fort Collins and Greeley, specializing in off-campus housing for college students. The state plans to return $980,000 of the settlement to affected consumers, and a process for recompensation will be announced in the future, the attorney general’s office said.

The Department of Law ordered the company to send it a list of residents who vacated their properties from January 2020 through Dec. 1, 2023. Government officials plan to go through those records and contact tenants to return their money.

At a news conference Tuesday, Weiser listed two potential concerns for his office: being unable to reach every mistreated resident in the Four Star case or finding even more tenants who were affected, which would bring the total money owed beyond the $1 million settlement. So Weiser encouraged Colorado tenants who’ve experienced legal rights violations with Four Star and other landlords to report them at stopfraudcolorado.gov.

“Too often, landlords and property management companies nickel and dime tenants by deceiving them into paying for things like normal wear and tear or damage from previous tenants, or by charging fees not reflected in leases,” Weiser said in a statement. “For consumers who are able to act effectively as their own lawyers, they may complain and get their money back; most consumers, however, are unable to do so and are mistreated in violation of the law.”

Four Star Realty still “strongly 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 company said in a statement Tuesday`. “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.”

CEO Caldwell Sullivan pointed to his company as having “always 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.”

The Colorado Attorney General’s Office and the 20th Judicial District Attorney’s Office in Boulder spent more than a year on their investigation, which initially was spurred by occupant complaints.

District Attorney Michael Dougherty said his office had heard from college students, their parents, the city of Boulder and the University of Colorado Boulder with concerns about security deposits that had been wrongfully withheld by Four Star over the past couple of years.

Those deposits can range between $5,000 and $10,000, he added at the news conference.

Four Star is now required to disclose all costs to renters in their leases. It must also cut its repainting charges, and reevaluate the necessity of carpet cleaning before levying a fee. It must keep documentation about property inspections and withheld security deposits for three years, and share them with any tenants who ask.

Four Star can’t retain money from a security deposit, including for rekeying, unless the withholding is “directly related to the tenant’s conduct.” It can only charge for rekeying if leasees opt for Four Star rekey locks, with prices made transparent in advance.

With more than 600 reviews on Google, the company has earned a 2.9-star rating out of 5. The most recent reviews posted within the past few months either give the company very low or very high scores, with the 5-star ratings often complimenting specific employees.

Weiser declined to disclose any other investigations that may be underway, but said, “This will not be the last such matter that we bring forward to advocate and fight for tenants.”

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