The owner of 61 Molesworth Street in Wellington is now under investigation by a government department, and control over the deconstruction of that building has been taken off them by the Wellington City Council.
The Ministry of Business, Innovation and Employment has confirmed it is investigating allegations that 61 Molesworth Street was being used for residential purposes unlawfully.
"Renting out unconsented buildings, or buildings not consented for residential purposes, to people to live in, to use as their homes, raises serious health and safety concerns and is a breach of landlords responsibilities," Steve Watson, National Manager Compliance and Investigation (Tenancy Services) at MBIE said.
The property is due to be demolished this week after it suffered significant damage in last Monday's 7.8 magnitude earthquake.
1 NEWS broke the story last week that a family of four had been living on the first floor of the commercially zoned property since June.
The council has taken "over management of the site so that the deconstruction could happen as quickly as possible".
"We need to have more advice"
Mike Scott, Manager of Building Consents and Compliance said all costs will be recovered from Prime Property and their insurance company.
"To ensure public safety, this work must be completed as quickly as possible, and that's one of the main reasons we're taking over management of the building," he said.
In response to the investigation the CEO of Prime Property Group, Eyal Aharoni, told 1 News:
"It's a very complex situation, there are a lot of parties involved, there are a lot of insurers involved, there are lawyers involved and everything is new to me and I haven't got advice on the matter, we need to have more advice before we discuss it."
Prime Property has admitted in a statement it was wrong to place tenants in 61 Molesworth St but say it was motivated purely by trying to help the family.