Threats, Stormy Exits and Violence at New York Closings
By Constance Rosenblum
The setting for the closing on an apartment in the East 50s was a lawyer’s office. Things seemed to be going well between the sellers until the wife found out the price her husband had received for the apartment. She clearly didn’t think it was enough. When he asked her to turn over her keys, she hurled them at him and hit him in the forehead, drawing blood.
This is New York City, where real estate transactions can literally take on the trappings of a blood sport. Unlike most other parts of the country, it is a place where lawyers are invariably involved in the transaction; at the very least, this increases the number of people around the table. Deals can be dauntingly complex. Even with relatively low-end properties, mind-boggling amounts of money change hands. Cultural differences, common in this multicultural city, can add kindling to a volatile situation, as can personal issues like a messy divorce.
Not to mention the fact that New York is heavy on Type A individuals. Or as Stephen Raphael, who has been practicing real estate law in New York for four decades and has seen his share of drama-packed closings, summed it up, “A lot of people in this city have gotten what they want by being emotional.”
Some of that emotion is understandable. The purchase or sale of a house or apartment is the biggest financial transaction most buyers or sellers will ever be involved in, and the closing is the moment when the promises and concessions that have been patched together to get a contract signed now have to be made final. All the parties — lawyers and brokers for both, along with the mortgage broker, appraiser and bank representatives — gather in a nondescript conference room at a bank or a law firm to seal the deal.
Dozens of documents, many in duplicate and triplicate, must be reviewed and signed. Sometimes pieces of paper seem to fly about at breakneck speed. The process can take hours. Considering that there were 37,000 residential closings in New York City last year (down from a peak of about 60,000 a few years ago), the opportunities for upset are many. And while the growth of the Internet has educated both buyers and sellers, information is often mixed with misinformation, which can be dangerous for buyer and seller alike.
Fern Hammond, the Halstead broker who witnessed the key-throwing incident, says lots of brokers have such tales, and recount them with relish. “They love to tell them at cocktail parties,” Ms. Hammond said.
Brokers are reluctant to name names — memories in real estate are long, and everyone hopes to live to fight another day — but even those who have hammered together hundreds of deals retain vivid memories of their more horrific closings.
True, the vast number of participants do what they can to keep things under control. “Please let’s keep this professional,” Juan Rodriguez, a Citi Habitats broker, pleaded by e-mail to a seller’s lawyer after a volley of acrimonious messages sent in connection with the sale of a condo in Turtle Bay. “We are in the relationship business, not the arm-twisting or pressure business.”
Yet such peacekeeping attempts don’t always succeed. And although brokers and lawyers agree that the potential for high emotion at closings fluctuates depending on the shifting real estate climate, they need little prompting to share their favorite horror stories.
Mr. Raphael remembers, though he would probably rather forget, a particularly bitter closing last year involving the sale of a two-family brownstone in Greenwich Village carrying a price tag of more than $3 million.
“Two days earlier, the sellers had removed the washing machine from the premises,” said Mr. Raphael, who was representing them. “Frankly, you and I wouldn’t have wanted that washing machine. It was eight years old and worth maybe $100. But the buyers had already felt pressured to up their offer and to concede many things, and this was the last straw.
“So we’re sitting around the table, and one of the buyers takes out a certified check for the balance of the purchase price, and demands, ‘Are you going to put back the washer?’ The seller answers, ‘No, it’s not in the contract.’ The buyer rips up the check and says: ‘I’m going to ask you one more time. Are you going to put back the washer?’ Again the seller says no. At that point, the buyer puts the two halves of the check in a glass bowl, takes out a match, and lights them on fire. Then he marches out.
“Everyone’s totally horrified,” Mr. Raphael said. “The check is for maybe $1.1 million. And do you know how hard it is to replace a certified check?”
Among those watching in disbelief was the buyer’s partner, who according to Mr. Raphael was mortified. “You see what I have to put up with?” he announced to the room at large.
The matter was resolved when the sellers agreed to give the buyers $300 for the washer, and the man who had stomped out of the closing — and was cooling off over a drink at the Gramercy Tavern — was persuaded to return and complete the deal.
Wolf Jakubowski, a senior vice president and managing director of Brown Harris Stevens, has spent three decades handling hundreds of town house transactions worth a total of more than $1 billion. One of his most vivid memories concerns the closing for a house in the West 70s a few years ago. The sellers were a young couple with children, and even before the meeting started, they were fed up with the buyers’ demands.
The explosion occurred just as things were supposed to be winding down. Both sides had already signed all the necessary papers and were negotiating small adjustments, as is common with such transactions.
“Finally there was one demand too many,” said Mr. Jakubowski, who was representing both sides. “The sellers said, ‘Well, if you’re going to be that way ...“ Then they got up from the closing table, stormed out of the room, marched back to the house and removed all the light bulbs. It wasn’t the amount of money that was the issue, it was the principle.”
The sellers have since left the country, and the buyers have since resold the house, but the story remains one of Mr. Jakubowski’s favorites.
John Wagner, a partner with his brother, Steven, of Wagner Davis, likes to tell the story of a closing at which he represented the seller. He can’t remember the location of the building or the sale price. He does, however, remember what happened when all the parties were gathered around a conference table in an office on West 57th Street.
“The buyer walked in, pulled a revolver out of a holster he was wearing, and placed it carefully on the table,” Mr. Wagner said. “Everyone’s stunned — they just stare at it. No one says a word. Then the man asked, ‘Does anyone want to negotiate any of my terms?’
Needless to say, the closing proceeded without a peep from anyone.
“I hadn’t been aware of any particular acrimony,” he said. “But that’s not to say that it didn’t exist.”
As for the closing where the wife hurled the keys at her husband, Ms. Hammond recalls the fireworks as particularly memorable. “All of a sudden there was blood all over the place,” she said. “Evidently foreheads bleed profusely. Everyone was pushing the papers out of the way, and the husband was holding tissues to his wound. It happened almost 30 years ago, but it is something I will never forget.”
Then there was the two-bedroom co-op in the East 60s. “It was a lovely apartment in a 50-percent-down building,” said Ms. Hammond. She was representing the buyers, whom she described as “a lovely couple in their middle 40s,” adding, “He was a judge, and they were very gracious people, truly the salt of the earth.”
“For various reasons, it had taken a long time for the board to interview them, and at the closing, the seller insisted that they pay an extra month’s maintenance to cover the period they had spent waiting for the board’s approval. When the buyers refused, the owner of the apartment started banging his fist on the table, turned all sorts of colors, and announced, “If you don’t pay this, we’re not closing.”
With that, the owner stormed out of the room and headed for the elevator. When Ms. Hammond followed with the hope of coaxing him back, he elbowed her aside and growled, “Get out of my way, I’m leaving!” Only when the owner’s lawyer appeared did he reluctantly agree to return and complete the deal.
Like other brokers and lawyers who have witnessed such scenes, Ms. Hammond was struck by how small a sum had set off such bad behavior. “This was an apartment selling in the $350,000 range, and the maintenance was less than $1,500,” she said. “The seller’s behavior had nothing to do with the amount of money involved. For him, it was strictly a matter of principle.”
Among other closings whose horrors make the rounds when brokers get together: The one for a loft in a prewar building off Bleecker Street, when a fight about commissions ended with the seller punching the buyer in the face and screaming, “What the brokers should have told you is there are mice all over, and I hope they eat you alive!” Or the one on the 30th floor of a lawyer’s office at which a representative of the co-op board insisted that the window washer was spying on them and refused to continue until he finished work.
Sometimes the transaction has its tragic side, like the one involving the seller who suffered a heart attack at the closing table. (He recovered, but the proceedings had to be postponed.) Sometimes the theatrics are so over the top, the witnesses throw up their hands and laugh, as happened a number of years ago when an apartment house in Tudor City changed hands.
“The closing was scheduled for 3 p.m.,” said Mr. Raphael, who represented the buyer, “which is already a problem because they tend to drag on into the evening. Then the lawyer for one of the lenders didn’t show up until 5. When he finally arrives — this is in the era before cellphones, remember, so we couldn’t call him — he looks terrible. His entire left shoulder is wrapped up in bandages.
“He explains that he just had minor elective surgery at Mount Sinai. So we finally finish the closing at 9:30 at night, and this guy is looking worse than ever. We ask him if we can get him a taxi. ‘That’s all right,’ he says. ‘I’ve got an ambulance waiting downstairs.’ ”
Friday, April 27, 2012