A squatter at the Barrett St hospital in New Plymouth has admitted leasing out areas of the complex to families who now face eviction.
The Taranaki Daily News visited the complex last week, and discovered claims of a much larger community than was previously thought to exist.
At least two families were unaware they were squatters in the building, because they were paying weekly rent in what they thought was a legitimate arrangement.
Last Thursday, both legal and illegal tenants of the Barrett St hospital were told to vacate the premises as soon as possible, after it was deemed an earthquake and health risk.
The Daily News spoke to one family who had been living in the building for the past eight months.
The family estimated there were as many as 15 other families living in the hospital.
The working family of five had been paying weekly rent to Hoani Brown under what they believed to be a legitimate agreement.
Mr Brown confirmed he had been taking rent money from the families, claiming it was payback for renovations he had done to the property.
"The rent came to me because I wanted to get my money back," he said.
"I spent thousands doing it up - about $30,000."
Mr Brown said up until last year he had been paying rent to the Office of Treaty Settlements, but stopped after it accused him of failing to pay.
He also said he had completed work within the complex, such as security, on behalf of the Justice Ministry. But ministry spokesman Nathan Green said the OTS had had no dealings with Mr Brown.
"We've had no arrangements with him being there. He is an illegal occupier and we're moving on it now.
"We haven't forced the issue in the past, but now that the buildings are unsafe, we want to tidy up the site.
"He has been given seven days to leave and we will enforce it after the seven days," he said.
The family, who wished to remain anonymous, had originally moved into the premises while they saved money to buy their own home.
"We've given him about $5000. It's just dead money, it's gone straight into his pocket," said the male occupant.
"We're not squatters though. If we were squatters, well, squatters don't pay, do they.
"We've made this into our own home."
The family realised they should have been more thorough with the agreement, and should have questioned Mr Brown when he declined to sign an official tenancy agreement.
They are now in search of a new house and have until Thursday to do so before the police become involved.
"We always knew this would be a temporary situation anyway, but it would have been nice to have been given more than seven days."
Mr Brown said he would not be resisting the seven-day eviction notice.
"I've lost a lot of energy with all this fighting, I'm not going to fight any more," he said.
Another Barrett St lessee facing eviction is Jasmin Hales from the Taranaki Music Education Centre, housed in the old nurses' home building.
Ms Hales set up her music facility in 2003, and has since spent thousands of dollars renovating and maintaining the building.
"I just about went broke on the whole place. We've done way too much work to leave, but then again, I guess it's just the reality of it," she said.
Ms Hales had also been sub-letting parts of the building to artists and musicians over the years. The Justice Ministry could not comment on the details of her tenancy agreement.
Ms Hales said she would be disappointed to see the Barrett St complex boarded up and abandoned.
- Taranaki Daily News