Salem

I let a friend build a leanto and bed on my claim, it is in the way of the new wall I wish to build. She has not logged in for 2 months and has not responded to my forum tells. What would happen to her alt char if I was to destroy it?

She would drop all of her possessions, and upon login would be naked and unable to log out until she claimed a new leanto/homestead.

Well that seems harsh, are there any other options? and while not being able to log out she would gain madness?

her possessions meaning equipped items such as a keyring also?

I would imagine yes, but the only other option you really have is to alter your wall plan as to not screw your friend over should she ever come back.