Reward: Money gained from the rent when you own the bordello or positive alignment points for closing it.
This quest doesn't appear in your journal, but is certainly worth checking out. Apart from being very funny, it can be quite profitable as well. You'll find the passage to Darkwood Bordello in Darkwood Lake. There you will be welcomed by Madame Minzche, who will tell you about the troublesome owner of the place. You'll have to find the Bordello Deeds in order to get rid of him. Now prepare for something drastic.
You have to get laid with the owner of the bordello. Gulp! Go get yourself a fancy dress (ex. in Bowerstone), shave your beard and moustache, and get the Redhead Wig from the Bordello floor (you have to rent one of the girls in order to get in there). When ready, talk to the owner. Once you're, uhm, 'done', he will fall asleep and start to mumble. It seems he buried the deeds under the tree near the pond. Go there with a spade and end this nightmare (certain spot is shown at the screen below).
Update: You don't need to sleep with the owner to get the location of the deed. Just buy some beer from the merchant right there in the bordello and give them to him. After 6 beers he'll say he's not feeling well and needs to go to bed. He'll ask you to help him to bed, and once he's asleep, he'll mutter the directions to the deed. (info submitted by Pheonix)
When you get rid of the now-former owner, Madame will ask you to change the bordello into a shelter for fallen women. Agreeing to that results in some serious positive alignment points, rejecting - serious money (and a possibility to get lucky as much as you want, yah!).