It's in the books. I'm going to just paste this from the Coraline Wiki, as there's no sense re-writing a good explanation.
Before the Pink Palace was separated to apartments, Mrs. Lovat used to
live there with her twin sister. But in 1952, her sister mysteriously
vanished one day, and Mrs. Lovat believed she was "stolen." Her
grandson, on the other hand, believes that she simply ran away. It is
revealed that Mrs. Lovat's missing twin sister Tasia ran away and was
stolen, by the The Beldam (Other Mother).
Believing that someone "stole" her sister and possibly hearing about
two other kids disappearing before her, Mrs. Lovat moved out of her
childhood home and divided it into three apartments. Afraid of the
Beldam claiming another child, she does not allow Wybie to enter it,
nor allow any tenants with children to rent the apartments, until when
The Jones' Family was allowed to reside there.
Even when her twin sister went missing, Mrs. Lovat kept the doll that
used to belong to her sister in a trunk, perhaps for sentimental
purposes. The doll, which used to look like her sister, was altered by
the Beldam to look like Coraline, as seen in the beginning of the
film. At the end of the film, Coraline invites Mrs. Lovat and Wybie to
the garden party, where Coraline tells Mrs. Lovat what really happened
to her missing twin sister.