The writer/narrator, Lemony Snicket, apologizes that this will be a story with an unhappy ending. The Baudelaire children—Violet, a 14-year-old inventor; Klaus, a 12-year-old who is already well-read and interested in biology; and Sunny, an infant who likes to bite things—live in a mansion in a big city. They take a trolley to the shore; it’s a cloudy day, and they have the beach to themselves until a friend of the family, the banker Mr. Poe, walks up to them and announces that their parents have died in a fire that burned down their home.

The children struggle to digest this news. Mr. Poe says he’ll watch over the vast Baudelaire wealth, which will revert to the children when Violet reaches adulthood. For now, they’re to live with him. Together, they all walk off the beach.

Mr. Poe and the children visit the burnt mansion, but they find nothing to salvage. The Baudelaires move in with the Poes and share a room with their children, Albert and Edgar. The room is crowded, and the boys are unpleasant. The clothes the Baudelaire children receive are ugly and uncomfortable, and the food is blandly boiled.