KEY POINTS:
Buyers of apartments in a luxury marina-side complex in the Coromandel resort town of Whitianga want their money back, because the Government wants to cancel the building's code of compliance.
In a rare move, the Department of Building and Housing has issued a draft determination revoking the code of compliance issued by the Thames Coromandel District Council for the four-storey First Light apartment block.
The 11 buyers sought a determination from the department after several problems, including structural defects, were found in the Victoria St complex.
Some remedial work was done, and the council and the developer, Marina Holdings, said there were no major concerns.
But last week, determinations manager John Gardiner issued a draft decision reversing the code of compliance issued in April and ordering the council to issue a notice to the building's owners, Marina Holdings, to fix the problems and bring the building up to standard.
Twelve of the 14 apartments were sold for between $600,000 and $1.2 million each, says Whitianga property consultant and buyers' spokesman Duncan Farmer.
One buyer withdrew from purchase and the remaining 11 want their deposits of between $5000 and $160,000 back and compensation for costs.
None of the buyers is living in the apartments because none had paid in full.
But without a code of compliance, they would face losses if they tried to sell.
The complex was built by Capri Construction for the First Light Group, which was liquidated when its owner Husain Al Saffaf went bankrupt in November 2005.
The group also developed the 19-apartment First Light Suites complex on the Esplanade in Whitianga.
The Victoria St building is now owned by Marina Holdings. The Companies Office lists Marina Holdings' director as Masooma Hashem - Al Saffaf's wife - and the shareholders as Al Saffaf and Sara Husain.
The report lists 29 defects in the building, including problems in the structural steelwork, walkways, decks, fire baffles, wing walls, cladding, doors, showers and handrails.
An independent expert employed by the department says there are major problems with protection of the steelwork, and some steel members have red rust surface corrosion.
The expert concluded that no protective treatment had been applied to steelwork exposed to the elements.
Defects on walkways, fire baffles, decks and wing walls have caused water pooling and leaks.
Mr Gardiner also notes that information on the building's intended use is contradictory and orders the council to make clear in all documentation that the apartments are to be used for residential purposes.
The buyers, the council and Marina Holdings have until Friday to respond to the determination and can also appeal for a judicial review on matters of procedure.
An Auckland lawyer acting for the buyers, Karen Cato, said it was very rare for determinations to be overturned.
She said the decision was unusual in its comprehensiveness and its conclusions.
"It's very rare that a council gets something so wrong."
Leaks, rust and losses
* 29 defects discovered in luxury apartments.
* Problems include leaks and rusting.
* Owners face losses if they want to sell.
