The Wellington City Council will prosecute Prime Property, the company which allowed tenants to live illegally in the condemned tower on Molesworth St.
The nine-storey building was damaged in last week's magnitude-7.8 earthquake and demolition is expected to begin on Thursday.
"There shouldn't have been residential tenants in that building," Mayor Justin Lester said on Monday. "It wasn't registered as a residential accommodation building."
The Ministry of Business, Innovation and Employment (MBIE) is also investigating.
"That building was being occupied in a residential capacity, which was a surprise to many," says MBIE's Chris Bunny.
Prime Property says it was just trying to help the tenants after their previous home was water damaged.