I think you’re approaching it a bit wrong. Even though it was a mistake, her property was altered without her permission. It was altered in a way that potentially made it more valuable, potentially could cause some headaches, etc. The cost of the materials is now a sunk cost for the builder, whether or not they can convince her to give them money.

So with that as the starting point, I think it is unreasonable to ask her to give any concessions. That is, she should not be forced to pay anything, and she should not be expected to give us her plot of land for a different one. The only outcomes the builder can reasonably expect are that they walk away losing the building costs, or that they walk away losing the building costs AND the demolition/restoration costs. They are better off if she wants a free house versus getting her clear land back.

Now, if she wanted to offer the builders some amount of money, that would be very gracious of her. I’m going to take a wild guess that a random sloppy real estate developer that sues others for their own mistakes isn’t seen as the most worthy of a gift of tens or hundreds of thousands of dollars.