Removal work is expected to start on 21 homes in the troubled Bella Vista subdivision in Tauranga in the next few days.
Residents were forced out of their new properties last year because of faulty construction after the work had been signed-off by the Tauranga City Council.
An independent report found the council failed in its inspections of the properties and issued codes of compliance in error.
The report by Paul Heath QC said the council did not perform monitoring and enforcement functions adequately, failed in its building consent functions, did not perform the Building Act inspections for both structural and geotechnical considerations and issued for code of compliance certificates in error.
Homeowners were not allowed back because the council deemed the homes too dangerous to live in.
The homeowners and the council finally reached a confidential settlement where the council agreed to take ownership of the properties.
The report said buying out the 21 homes making up the failed Bella Vista development was the only option available to avoid a potentially damaging legal case.
Contractors have been preparing the houses for removal by jacking-up the top story of each house from their block basements.
The top storey, which is the main part of each property, will eventually be sold off by the council.
Once these are removed, the ground floor areas where the construction problems occurred, will be demolished.