Carl and Toni Dock-Walshe paid $182,500 for the three-bedroom roughcast home on Thames Highway two years ago.
It had been extensively renovated by Oamaru property developer John Fleming, who said it was in good condition when he sold it.
Mr Fleming was not aware of any problems with the house while he was renovating it.
"We spent a lot of money on that place," he said when contacted yesterday.
Mr and Mrs Dock-Walshe shifted from Christchurch with son Jamie (10) to start a new life after two very emotional years. Second son Michael was born 3 months ago.
In July 2006, their daughter Corrina died after a long fight with cancer and a week after their daughter's funeral, their home was burgled.
Mrs Dock-Walshe's grandmother and grandfather also died that year.
Their new home in Oamaru was their "dream house", newly renovated and redesigned.
"It was something we never could have afforded in Christchurch," Mrs Dock-Walshe said.
"It was near the top of the comparable market prices, but because all the work had been done, there should have been nothing left to do."
Newly painted on the outside, it had been redecorated on the inside with new carpet throughout, a new, modern kitchen and new bathroom. It looked perfect.
But, in fact, it was far from that.
Now, they have been served with a Waitaki District Council order prohibiting them from living in the house because the floor is rotten and it floods underneath, making it unhealthy.
Mr Dock-Walshe has been off work and recently had surgery, but has not been cleared to return to his job at the Pukeuri freezing works.
They cannot borrow money from their bank for repairs because they have a mortgage and the house's value has plummeted because of its badly deteriorated condition.
They cannot afford litigation against the property developer, who bought and renovated the house before selling it.
They now use a sleep-out, which is about 5m long and 3m wide, to sleep in and as a living room, along with a 5m long and 2.5m wide tent on the back lawn, which is used for dining and day living space.
They can use the house only for preparing meals, showering and the toilet. Their clothing and furniture is becoming mouldy.
They feel they did everything right before buying.
They got a LIM (Land Information Memorandum) report from the council and had the house inspected by a private contractor.
The inspector found some work had been done without permits, but that was rectified before the sale was concluded.
Problems first emerged only four days after they moved in. Their bed fell through the floor and when they peeled back the new carpet, they found rot and borer.
Since then, bigger problems have emerged.
Mr Fleming said the issue was raised by the couple's lawyer with his lawyer some months ago.
He had not heard anything since then and thought the issue had ended.
He was unaware of any problems when work was done on it - there was no water or damage under the house when it was being renovated.
Floors had been replaced and it was "dry as anything", he said.
Waitaki MP Jacqui Dean has been involved for the past four months trying to find solutions.
Electorate agent Charlene Napier appealed to contractors, businesses and individuals who may be able to help with labour and materials to contact the electorate office, as ways of raising funds for the necessary repair work were investigated.
Mrs Dean is also trying to find temporary accommodation for the family through Housing New Zealand with the help of Work and Income.
In the meantime, the family plans to spend Christmas with Mrs Dock-Walshe's mother, but will have to return home to their sleepout and tent.
"It's our family that means the most to us. All we want is for them to have stability and a home."
The house
•Bought for $182,500 on November 16, 2006 after building inspection, LIM report.
•Newly-renovated, three-bedroom roughcast home, with heat pump; attached sleep-out/guest room.
•November 2006: Bed fell through floor due to rot and borer; rectified by developer.
•March 2007: Log burner installed because of damp. Two dehumidifiers running full-time; ongoing health problems including sore throats, aggravation of asthma, coughing and sneezing.
•August 2007: Kitchen gutted and rebuilt; floor replaced; dishwasher pipes found to have been leaking; paid for by insurance.
•Early 2008: Rotten and mouldy carpet, rotten floors and joists, dampness found; previously-repaired bedroom floor collapses.
•August: Family moves into sleepout, two-room tent.
•Second independent contractor's building report reveals many faults including faulty stormwater pipes, flooding underneath house, rotten timber and floors, mould, fungus, extensive dampness.
•December: Waitaki District Council declares house unhealthy, not suitable to live in.
