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I am sorry to hear about this situation.
If the tenant defaults on rent, the landlord has to file for eviction
and have the Court confirm an eviction. Once this happens, if the tenant still does not relocate, then the landlord has to get a WRIT and have the authorities relocate her. Self-help by simply locking the tenant out is NOT ALLOWED. If this is what you did, this is why the Judge ruled in her favor.
But going back to your original question. While UNCOMMON, it is not unlawful to have a day to day tenancy. Yes. However, it may be best to have it IN WRITING that this is what is agreed upon, or otherwise a tenant may try to claim that this was a month to month
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