Settlement reached with a realty company should help all renters, Colorado Attorney General says

A settlement reached between the state of Colorado and a company that manages properties that are mostly rented out by college students should help all renters. That's according to Colorado Attorney General Phil Weiser.

Much of the settlement money will go back to renters who lost money to property management group Four Star Realty, which operates in Boulder, Fort Collins, Denver and Greeley.

"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," Weiser said in a news conference on Tuesday morning.

An investigation by the state found that Four Star Realty was regularly charging student tenants for damages they did not cause or for fees that were not part of their leases. That impacted tenants who moved out between January 2020 and December 2023.

The Stagner family greeted the news of the settlement warily. 

"A million dollars, I cannot imagine that even is a dent, because they're not just in Boulder," said Stacey Stagner. 

Her daughter Elizabeth rented an apartment with four other young women in the basement of a home on The Hill in Boulder in 2021. Four others were renting the unit upstairs. 

"Downstairs... four girls, we all moved out in April. No one came back," said Elizabeth Stagner, who has since graduated. 

They did not get a break on the rent and had to continue paying until the lease ended in the summer. They moved out after multiple incidents of flooding that they said brought watery sewage up from a basement drain. Repairs were ineffective. Elizabeth Stagner says the company blamed feminine hygiene products used by the young women for the backup, but in speaking with people who rented the unit the year before, she discovered they had the same problem and they were all male. 

"They had the same issue. We were just blown away that they could say something like that to us," said Elizabeth.

The family says they found mold in the apartment and Elizabeth was charged baffling fees, including for yard maintenance. "Our yard was a patch of dirt."

Elizabeth and her roommates had about a third of their deposit held back.

Her mother thinks the settlement should be larger, "I feel like that's, I don't believe that's going to cover enough."

Since the state's investigation was launched, Weiser said the managers of Four Star Realty have cooperated. He also said the company has made several changes to improve its business practices moving forward. He said Four Star is now setting the standard for transparency and fairness that will be expected of rental companies in Colorado in the future.

"It's an obligation for every company going forward to disclose fees up front," said Boulder County District Attorney Michael Dougherty during Weiser's news conference. "I think that's of paramount importance here for property owners to be aware of that these fees have to be disclosed on the front end and they can only charge for repairs due to actual damage or actual cost by the tenant.

"So the repainting of the property just to make the property look better and get more rent the next time around? That can't be done on the back of the tenant."

Four Star Realty has agreed to disclose all fees, rent and other costs to tenants. They will also be required to maintain photos and documentation of property inspections and security deposits.

During Weiser's news conference, he shared the following tips for Colorado renters about their rights:

• Landlords can't charge fees that aren't disclosed.
• Illegal fees must be refunded.
• Your deposit can't be withheld for normal wear and tear.
• Your deposit can't be used to pay for damage from prior tenants.

Four Star Realty released a statement taking issue with the settlement and the view of the state, saying it "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."

In addition, Four Star, which did not answer a request for an interview, said the following in the statement:

"Nothing contained in this Final Consent Judgment shall be construed or deemed an admission by Defendants of any wrongdoing or any violation of state or federal law or regulation. Defendants expressly deny any liability or wrongdoing and are entering into this Final Consent Judgment to avoid further inconvenience and costs of potential 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.