Red Hook Condo Board Sues Developer, Lender

Residents at a troubled Red Hook condo are suing the developer over alleged construction defects and misappropriation of funds.

Earlier this week, the board of managers at 160 Imlay Street filed a lawsuit against developer Est4te Four Capital, representatives of the firm and the project’s lender, Churchill Real Estate Holdings, accusing them of breach of contract, unjust enrichment and fraud, among other claims.

In the lawsuit, residents allege life at the condo “does not come close to what was represented and what was promised” and that the offering plan was “rife with misstatements of fact and promises that Defendants and their representatives broke.”

The complaint claims shoddy construction work at the former warehouse, including leaks, falling debris, unfinished elevators and defective toilets. The board also accused the defendants of “abject malfeasance and criminal misconduct,” including lying to the attorney general and redirecting residents’ common charges to finish construction work.

Est4te Four and Churchill did not immediately respond to requests for comment.

The lawsuit, which seeks roughly $60 million in compensatory and punitive damages, comes 10 years after sales launched at the building, which grappled with construction complications and delays on its long road to sell out. Est4te Four bought the New York Dock Company’s former warehouse for $25 million in 2012.

In 2020, the developer secured a $74 million inventory loan from Churchill. Three years later, it swapped its sales team, Douglas Elliman’s Eklund-Gomes Team, for Living New York with just nine of its 70 units remaining.

In the complaint, the board’s attorneys describe the facade and roof as “riddled with cracks, holes and other defects” that have led to leaks and material falling onto the sidewalk and street outside.

They also claim the developer has yet to finish the elevators, did not install a lock or any other form of security on the front door and sold the same parking spots to multiple residents. The board alleges the building has still not been issued a permanent certificate of occupancy.

The developer acknowledged the alleged construction defects as part of another lawsuit with the project’s general contractor, Borough Construction Group. Red Hook 160, LLC, the shell company under which the building was developed, filed counterclaims against the contractor after Borough Construction sued the LLC in 2019, accusing them of “defective” work and “intentional sabotage” of construction.

A judge in January sided with the sponsor, granting summary judgment on the counterclaim. In the order, the judge referenced an email from one of the sponsor’s other contractors, which “noted that there was so much work not done to code and so much work not completed that it was ‘ridiculous.’”

The board also accused representatives of the developer, appointed to the board when it was still under sponsor control, of stealing funds earmarked for maintenance and using them to finish construction that should have been completed with the developer’s financing.

According to the complaint, the condo’s current board of managers took over from the sponsor in December 2023, roughly eight months after the sponsor told the attorney general it had turned it over to the residents. Once under their control, members of the board claimed they discovered the sponsor’s representatives had failed to pay some bills, including a water bill totaling about $75,000.