It depends on judge, and I can see this is going to be ok for 侄女和3个同学
I guess they do not have a lease since this is a "口头 agreement ". This is a strong indication of the truth of the statement from your 侄女和3个同学
They should have good chance to win the case IMO.
Also, was the modification/rehab done after they moved in? why did they allow the lanlord to do so?