A couple caught out living in a shed converted to a "tiny house" were told to strip it back to its original condition to comply with council laws.
But after seeking intervention from the Ministry of Business, Innovation and Employment (MBIE), they now have their papers.
The couple, who live on the outskirts of Havelock, said they were "narked on" by someone for living in the converted shed, and after that tried to comply with the rules.
However, they were told to tear many of the modifications out to get compliance, but took the matter to the MBIE, and are now certified.
The shed's owner, who didn't want to be named, said after the Marlborough District Council initially contacted them about the shed, inspectors visited the site in August last year and noted it was being used as a makeshift "sleepout" - a breach of Building Code standards.
They asked the council how they could gain the official consents needed to make their "store [or] office" rooms in their shed compliant.
The next month they promised the council they would longer live in it. But their building papers were declined after the council said it suspected the building would still be used for more than storage, and the shed was a low risk to human health and "not fit for human habitation".
The council said their "easiest option" was to return the shed - with a bedroom, living area and kitchen - to its "original condition" by removing the internal linings and insulation they had installed.
The shed's owner said he was also told to take the drywall boards off the inside of the walls, which he refused to do because it would cost so much.
Marlborough District Council revealed earlier this year that increasing numbers of small dwellings, or "tiny homes", have been caught flouting building rules.
Tiny homes include converted containers, purpose-built constructions and converted out-buildings, like sheds.
The jury is still out on whether moveable dwellings are buildings or vehicles, but immovable dwellings are buildings, and require consent before renovations are done.
Works completed without consent can be made legal under a certificate of acceptance, if they comply with the Building Act.
Unhappy with the council's position in this case, last October the couple asked for the Ministry of Business, Innovation and Employment's opinion to settle the issue.
In their evidence to the ministry, the pair admitted they had lived in the shed while building their house, but said they'd since moved into a caravan and wanted the shed for storage.
They had realised living in the shed was "not legal", despite the property having a consented shower and toilet.
But the council argued the shed's use as an office - one of the two uses the couple originally applied for - changed it from an "out-building" to a "commercial building", which had "vastly different" compliance rules, and was still human habitation.
It also said there were other reasons the application was refused, such as items that failed to meet building standards.
Ministry determinations manager Katie Gordon said in her judgement that while the council was "correct to be concerned" about human habitation, its refusal was incorrectly based on how the shed would be used, rather than if it was compliant.
Its refusal also did not make it clear to the couple that the council thought the shed's usage had changed. It had also inadequately described what building works did not comply.
Gordon said the council and couple must agree on what the shed would be used for before the application is reassessed.
A council spokesman has said the owners were issued a certificate of acceptance in August this year after the council completed its assessments, in line with the ministry's determination.
The owner said he had framed the ministry's determination and hung it on a wall.