Every other month, the Hanson Law Firm hosts "War Story Wednesdays," a lunchtime forum for lawyers to share their tales of triumph and struggle in the legal profession. In February three lawyers told their stories at San Francisco's City Club, and all attendees earned CLE credit. Dierk Herbermann, McGuire Real Estate's general counsel, talked about a property sale with a morbid twist. Here is his story:
I'm general counsel of a real estate firm, and one day, an agent who has been in my office for more than 20 years - we'll call him Fred - asks me a very basic question: "What's the disclosure requirement for death in a property?" And I wonder why he's asking, because it's right there on the disclosure form. It says any death that had occurred within the last three years must be disclosed.
Then Fred says, "My client's brother died on the property, and she's a trustee. This has been so emotional for her that she can't bring herself to even put it in writing to disclose it. How do I deal with this?" He also wanted to know how descriptive he'd have to be about the death, which let me know we weren't dealing with natural causes. By the way, this is a $7.5 million property in San Francisco in 2012, when the market was heating up.
I ask him for more information, and this is what Fred tells me: Her brother, the property owner, was going to the gym in the early morning with his boyfriend, and they have a bit of a spat. And right before they leave, the owner says, "Just wait a minute, I forgot my gym bag, I'll be right back." He goes up to his bedroom on the top floor of a three-story building, and jumps headfirst out the window. He lands on the sidewalk, right next to the car where his boyfriend is.
My advice for Fred is that they don't have to disclose the nature of the death to everybody, but the actual buyer of the property has to know the details, especially since there are certain cultures where death of any sort presents a problem in purchasing property. So Fred places the property on the market, and discloses that there was a death on the property. He gets two offers, and then the suicide has to be revealed.
So we tell the buyer the details of the death, and it turns out they're a Buddhist couple. Instead of acting dismayed by the news, they say, "We're very spiritual, and we're going to have a Buddhist priest come in and cleanse the house." And sure enough, the priest comes and does his thing. And the buyers end up feeling like they've connected with the deceased, because the Buddhist priest has freed him from the turmoil that was in his life. I was proud of my agent-it was a very tough situation and he got it in contract.
Four days later, it's closing time, and guess what happens? My phone rings, and it's Fred again. "I've got to talk to you," he says.
He tells me he's been dealing with the sister of the deceased property owner, the one who was managing the estate and was the trustee. And Fred noticed that she'd been acting a little strange in the last week, and he'd been calling her all day and she hadn't answered the phone. Fred felt concerned about her so he decided to go by the house. Fred and his assistant get to the front door and the lights are on.
He goes inside to find she'd hanged herself by an electrical cord in the master bedroom. He has to call 9-1-1, and he's visibly shaken up. So my job is twofold: I have to make sure Fred is doing all right, and then I have to figure out how to talk to the buyers about this.
But Fred gets it together, and he explains what happened to the buyers. They didn't react dramatically, but they were definitely upset. They wanted this property so badly and they wanted the second suicide to be something they could move past. But they realized that in the end, they couldn't. They cancelled, and we contacted the other folks who were interested in the property, and got full disclosure in contract with them. And two months later, the new buyers closed on the property. I must say, it was probably the most interesting, successfully closed transaction that I have ever dealt with in my career.