Brooklyn’s Bensonhurst Chinese community has been protesting the construction of a homeless shelter at 2501 86th Street for nearly 290 days. The developer, Sandhu, is currently embroiled in financial disputes. In February of this year, “Columbia Capital II Inc.,” the financing entity for the project, filed a foreclosure lawsuit against the developer in the New York State Supreme Court, alleging the developer’s breach of commercial mortgage loan obligations and seeking to foreclose on the land assets to repay the outstanding loan. A recent development in the case is that Sandhu, the developer, sent a letter to the judge on April 27 claiming fatal flaws in the foreclosure action and requesting the court to dismiss the lawsuit.
According to court documents, real estate financing company “Columbia Capital II Inc.” filed the lawsuit on February 20, demanding that the developer immediately repay $3.5 million in principal and interest, or else, under the default terms, incur default interest at an annual rate of 24% (2% per month), accruing a daily interest of $2,333.33 from August 14, 2024. By January 31, 2025, the developer owed a total of $3,866,478.
However, the developer countered in a memorandum submitted to the court on April 27. The developer pointed out that when calculating the debt, the plaintiff financing company did not deduct the $167,708.35 paid by the developer between September 2024 and January 2025. More crucially, the plaintiff failed to provide a default notice and an opportunity to remedy the default as required by the loan and mortgage agreement before unilaterally imposing a default interest rate of up to 24%, highlighting significant procedural flaws.
Citing Section 3211 of the New York Civil Practice Law, the developer argued that the lawsuit should be dismissed due to procedural and factual errors by the plaintiff. According to the sworn testimony of Tejpal Sandhu, the developer’s person in charge, after the loan matured, the developer continued to make substantial payments, and the plaintiff did not object or preserve rights when accepting these payments. Despite this, in a notice of repayment issued by the plaintiff on April 9, 2025, the $167,708.35 payment was not deducted, and a 24% default interest was retroactively imposed.
The developer contends that the plaintiff’s actions violate the duty of good faith and fair dealing in the contract, leading to significant damages such as excessively high repayment amounts, damaged credit, and difficulty in refinancing. The developer believes that, upon correct calculation, the outstanding loan balance should not exceed $3,699,174 as of April 30, 2025. The developer has also filed a counterclaim, seeking the court to declare the acceleration of payment and the foreclosure action invalid, and to refund the illegally collected interest and related damages.
Currently, both parties are engaged in fierce legal battles in court. With the developer having officially launched a counterattack and requested the dismissal of the foreclosure lawsuit, the 2501 plot will not enter the foreclosure process as quickly as initially anticipated by the protesting public. Additionally, it is reported that the developer is considering seeking new sources of financing to repay the existing loan and maintain ownership of the land. The final outcome of the case will not only determine the future development direction of the plot but also impact the ongoing protests against the homeless shelter by the Bensonhurst Chinese community for nearly a year.