A state judge seemed skeptical yesterday that a deal between a private developer and the federal government that paves the way for the construction of a dormitory was fair to nearby residents in the East Village.

The proposed dormitory on East 12 Street between Third and Fourth avenues will house New York University students. It will also loom large over the largely residential block and has prompted resentment from several neighbors, who filed a lawsuit to block construction earlier this month. The dorm is slated to be 26 stories high and 180,000 square feet, a lawyer, David Satnick, who represents the developer, said.

To build at those dimensions, the developer, Hudson 12th Development LLC., struck a deal with an adjacent post office that will exempt the developer from the city’s zoning restrictions. Mr. Satnick said the developer paid the federal government $7.7 million to enter into the land deal with the two-story Cooper Station Post Office.

The judge, Edward Lehner of state Supreme Court in Manhattan said the city zoning rules cannot stop the federal government from constructing “a building to the moon or higher.” Judge Lehner seemed sympathetic with the plaintiffs, but signaled that he might dismiss the lawsuit on a technicality.

“I have difficulty with this agreement,” Judge Lehner said.

The trouble, Judge Lehner said, was that once the dormitory was built, the city could do little to prevent the federal government from building a skyscraper over the post office even though it had sold its air rights to the property. In effect, nearby residents could end up with two buildings, not just the NYU dormitory, that are exempt from local zoning laws.

“The whole concept is run amok,” a lawyer for the plaintiffs, Kevin Finnegan, said.

The proposed dormitory is on the former site of the historic St. Anne’s Catholic Church, which existed for more than 150 years before much of it was demolished in 2005. Currently, construction crews are only doing excavation work on the site, although Hudson possesses the necessary permits to begin construction immediately, a lawyer for the city, Michelle Goldberg-Cahn, told the judge. Both the city and Hudson are defendants in the lawsuit. The city issued a work permit to Hudson for the site last month, Ms. Goldberg-Cahn said.

Mr. Finnegan asked Judge Lehner to forbid Hudson from beginning construction until the courts had heard the lawsuit.

Mr. Satnick, the attorney for Hudson, urged Judge Lehner to dismiss the lawsuit because standard procedure is for the city’s Board of Standards and Appeals to take the case before a state judge does.

The case is currently pending before the Board of Standards, although Mr. Finnegan expressed concern it was not on schedule to decide the case until after construction had already began.

Judge Lehner seemed conflicted about the possibility that he might be forced to dismiss the lawsuit on such a technicality.

“Isn’t there something wrong about allowing construction that may be illegal?” Judge Lehner asked.

Judge Lehner did not rule on the case immediately.