I'm in real estate and was able to locate the owner's condo. It's part of a HOA. The HOA's CCRs forbids leases for "transient or hotel purposes." The typical meaning of this is leases of under 30 days. The CCRs also require that permitted leases be in writing.
The sfgate article says that the owner was renting this out for $450/week to help cover her mortgage and expenses so it is probable that some of her activity was in violation of the CCRs. It also sounds like she didn't actually have a written lease with the squatter tenant who booked a 44 day reservation and therefore has tenants rights.
I am not a fan of AirBNB but AirBNB doesn't deserve blame for this. This owner thought it would be cool to become a real estate investor and she didn't know what she was doing. Now shes paying the price...
