Colorado has recently been a hotspot for tenant rights advocacy. 

On Jan. 9, the same day that Colorado Attorney General Phil Weiser announced a settlement with Boulder-based Four Star Realty, former tenant Nichole Collins filed a proposed class-action lawsuit against Greystar, the top manager in the country.

In the suit, Collins alleges that Greystar charges tenants illegal and hidden “junk fees” for things like pest control, valet trash and billing in addition to monthly rent. She alleges that these fees are not advertised in the monthly rent and are hidden from prospects. Once disclosed, they must be paid for tenants to stay in their apartments.

Collins, who seeks to represent a class of Greystar tenants in Colorado, contends these fees don’t provide residents with any extra service beyond what they’re required to provide as a landlord and that it is illegal to pass them on to tenants.

“When I leased with Greystar, I thought my monthly rent would be one amount, but it turned out to be much higher because of Greystar’s fees that didn’t cover any of the services they provide, besides their most basic services they are required to provide as a landlord,” Collins said in a press release from nonprofit Towards Justice.

Surprise charges

Collins alleges that Greystar took over management of the property where she lived — The Hamptons in Lakewood — after she had moved in. She claims that the company’s lease renewal letter did not include fees. Upon accepting the offer in the letter, she only learned of the extra costs when receiving her lease.

“While a renter may be able to manage and plan for high rents if they know about them in advance, the addition of an array of mandatory fees for ‘ancillary services’ can unexpectedly push renters well beyond their means,” the suit said.

The suit contends that undisclosed fees also limit competition in the rental industry. ”Prospective tenants cannot meaningfully compare prices for apartment rentals when significant portions of the monthly rent are disguised as add-on fees,” the suit said. “This may lead tenants to pay more than they otherwise would have for monthly rent, even when they can ill-afford the difference in price.”

Collins is represented by Towards Justice and another nonprofit, Justice for the People Legal Center. Greystar declined to comment on the case.

The suit also contends that issues with fees go beyond just the largest manager in the industry. It says companies in a number of industries, including airlines, banking and utilities, are deceiving consumers with hidden costs. Last year, The Federal Trade Commission announced a new proposed rule to prohibit businesses from charging junk fees.

“Greystar’s business strategy has become increasingly common,” the suit said. “Over the past several years, powerful and deep-pocketed corporations have sought to grow their profits by packing their contracts with hidden and misleading charges — known as junk fees — that increase the costs of daily life for working people.”

Fees in Colorado

Greystar isn’t the only apartment manager facing scrutiny over its use of fees in Colorado.

Last week, Weiser announced a settlement with Four Star Realty after a state investigation found numerous instances of the property management company “illegally charging tenants for routine repairs and other services,” according to a Jan. 9 press release from the state.

The Colorado Department of Law investigation found that Four Star regularly charged its tenants, primarily students, for damage they did not cause, billed them for unnecessary work and charged fees that were not in their leases, according to Weiser’s office.

After the investigation, Four Star and the state of Colorado settled and agreed to the $1 million penalty, which will be earmarked for consumer restitution. The management company said the settlement “is not an admission of wrongdoing or violation of laws,” according to a statement it shared with Multifamily Dive. 

The company said it entered into the final consent judgment to avoid the further inconvenience and costs of potential litigation.

Four Star Realty CEO Caldwell Sullivan said the company, which operates approximately 5,000 units of rental properties in Boulder, Denver, Fort Collins and Greeley, was “committed to following industry standards” in the 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,” Sullivan said in the 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.”

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