Safety chiefs have launched an inquiry into the construction of apartments behind The Hub in Market Rasen.
West Lindsey District Council has also revealed it has begun a legal battle with developers Lincs Homes Ltd.
The probes follow complaints over builders at the site off Union Street not wearing safety helmets and damaging neighbouring property.
The Health and Safety Executive told the Rasen Mail it is aware of complaints, which it is investigating.
“We have been to the site and spoken to people there,” said an HSE spokeswoman.
She added the agency could prosecute, halt construction or issue specific instructions, but it was too soon to say what it would decide.
This follows WLDC saying the workers had breached specific conditions it imposed on them and there are many matters it is unhappy about.
“Our legal team has written to their solicitor and we are awaiting a response,” said a WLDC spokeswoman.
Market Rasen town and district councillor Ken Bridger said it was up to WLDC to enforce action.
Lincs Homes director Amy Pickering was again unavailable for comment.