[kevin993]

The owner of the land is entitled to be restored to her original position.

The developers own that responsibility. They can offer her a different lot and/or cash, but she has no duty to accept.

The developer may have insurance coverage that pays for negligence or mistake (as opposed to intentional misconduct). From her perspective, it would be no different than if she lived in the house, the developer was building a house next door, and and the developer had an accident that ended up burning down her house. From the developer's perspective, it might have an insurance claim for the mistaken construction costs and the costs of resolving (either paying her or paying to tear down the house).

The insurance company likely has a number in mind that it would be willing to pay to make her happy with another lot but would be cheaper than litigation or covering the cost of construction and removal.

The developer and contractor have an issue between them of liability. The contractor acted as the agent of the developer. Without more facts, we can't tell more but they can work it out or litigate with each other. There likely would be insurance coverage and companies involved. The owner of the land isn't required to sort that out.

If the developer or contractor has no insurance coverage and only limited assets, the owner could be stuck. She could either keep the house or sell and find another property. Not ideal but she will want to avoid bearing further losses.