Generally speaking, the terms of the Proprietary Lease supersede any House Rules. If the two are in conflict, the PL is the governing document.

I read through the case cited by another poster (221 Middle Neck Owners Corp. v. Paris). Any time a decision uses the word "ambiguity", the results are not going to have a happy ending.

Your best bet in this situation is to contact an attorney for an opinion and advice on what your options are and how to proceed. Do not try to be your own attorney, write any fierce letters, or do anything to antagonize the board. They hold most of the power, courtesy of the Business Judgment Rule, and really, all you want is to have your niece to continue living in your apartment as before.

Rules made to counter the encroachment and illicit subletting of AirBnB tend to carry a lot of weight. If your niece's occupancy termination is collateral damage, it's a shame, but it may be reality. I checked my Proprietary Lease and nieces and nephews are not listed as permitted family members.

Perhaps you could post the verbatim text of the new House Rule. That might help us come up with some creative ideas.

Good luck!