My guess is that the owners were well aware of the situation when they purchased the property. The owners stated that they were warned by "pretty much everyone" not to purchase the property, and the fact that the property came with someone living in it should be a pretty big red flag. For those that have been around SF long enough, it's easy enough to recognize when someone is playing the 'sf housing regulatory lottery'. The basic gist of the game is as follows:

Step 1 - Buy a property that is impacted by certain regulatory constraints (which depresses it's market value heavily). Step 2 - If you are cheap, sit, wait, and pray that natural forces relive you of the regulatory burden (or make life a living hell for your existing tenant in an attempt to get them to move out). If you have some money, actively spend it to rid your property of regulatory constraints. Step 3 - Once unburdened (or partially relived) of said constraints, sell the property and profit handsomely.

This game is primarily played with rent controlled units and TICs. The owners in question bought property on the cheap, evicted an old disabled lady who is now homeless, and made bank. Sure, the lady was a piece of work herself, but let's not pretend these owners were saints, they knew what the endgame was all along.