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In a word - yes.
If she moved in to live there, then she is violating the terms of the lease. This is grounds to have the lease terminated for material breach of contract.
Second, if she moved in to live there, then the city may end up fining the landlord for issues with proper certificates for residential lease, plus lack of other utilities and issues with the building not being approved for a residential lease. This will end up costing you in hundreds if not thousand of dollars.
Finally, she can move in and then use the above to attempt to sue you for breach of warranty of habitability as a landlord.
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