Is it illegal for her to ask for the $25,000? Of course not.
Is it ethical? The law really only cares about what's legal and what it isn't.
One could argue that, with the improvements, the overall value of the property -- including your father's share -- has been increased. Is it ethical for him to reap the benefit of an increase in value without having done any of the work?
Ultimately, the two of them will have to work out a deal. Hopefully, they can do it without having to go to court and spend money on lawyers and fees.