Four Star Realty, a Colorado property management company, will pay $1 million to the state in a settlement announced Tuesday, according to a news release from Attorney General Phil Weiser.

The settlement ends an investigation that found the company illegally charging tenants for routine repairs and other services, according to the release. 

Under the settlement’s terms, Four Star — which largely rents to college students in Boulder, Fort Collins, Greeley and Denver — agreed to pay $1 million to the state, most of which will go towards consumer restitution. 

The Department of Law investigation found that the company was regularly charging tenants for damage they didn’t cause, billing them for unnecessary work and charging fees not mentioned in their leases, according to the release. 

During the investigation, Four Star cooperated with state attorneys and is now under a consent decree, meaning the company is bound by certain requirements for their business practices.

Under the decree, the company is required to keep photos and records of property inspections and security deposit withholding documentation. They have to give those documents to tenants when requested and are not allowed to withhold security deposit money unless the withholding amount is related directly to tenant conduct. 

They are also required to minimize repainting costs when filling nail holes or covering minor wall damage, and are not allowed to charge tenants for carpet cleaning unless it’s deemed necessary, according to the release.

Four Star is barred from withholding rekeying costs from security deposits and can only charge for rekeying if tenants choose to have Four Star rekey locks and the costs are disclosed in advance. They also agreed to disclose all fees, rent and other costs on lease documents.

The Department of Law is requiring the company to give a list of all of the tenants who moved out of their properties between January 2020 and Dec. 1, 2023 and the department will announce a consumer restitution process.

This settlement is the first action the Department of Law has taken since a state law was passed in 2022 that gives the attorney general the authority to bring civil and criminal enforcement actions related to housing statutes. The law also established a housing unit within the department.

Twentieth Judicial District Attorney Michael Dougherty, who referred the case to the attorney general’s office, said the results of the investigation come after over a year of work in the district attorney’s office and attorney general’s office in response to tenant complaints. 

“The District Attorney’s Office prioritizes fighting for consumers in our community,” Dougherty said. “This consent judgment, and the significant restitution to be paid, represent a positive step forward for tenants in Boulder County.”

During the investigation, Four Star took steps to revise business practices, Dougherty said. Between those actions and requirements of the consent decree, other property management companies have a “roadmap and standard” for business, he said.

For tenants who can act as their own lawyers, they can complain and get money back, Weiser said. But most tenants do not have that ability and can more easily get mistreated in violation of the law. 

“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 agreeing to this settlement, not only is Four Star choosing to do the right thing and reform its business practices, but it is also working with our department to set the standard for fairness and transparency in the industry that others must follow to comply with state law.”