They may be "legally habitable" under the normal building codes, but those codes don't take into account the circumstances of a pandemic disease.
MIT has contracted with these students to provide them with housing. Part of their normal obligation under those contracts would be to provide them with housing that offers a reasonably healthy environment. MIT will have by now heard from a lot of Highly Credentialed Experts that, in the circumstances of a widely circulating coronavirus, normal dorm conditions don't provide that reasonably healthy environment anymore -- they instead put students at elevated levels of risk.
So if you're MIT, what do you do? You could say "hey, those dorms up to code!" and keep on housing people in them, sure. But if you do, you open yourself up to lawsuits from outraged parents if those students end up getting sick at greater rates than the overall population. And, when it inevitably comes out in the discovery process of those lawsuits that you were directly warned against doing that by the aforementioned Highly Credentialed Experts -- well, at that point you are boned, my friend, contract or no contract.
Or, alternately, you can point to the declaration of a state of emergency, declare that the dorms aren't fit for habitation under the current circumstances (which, you will take pains to remind everyone, were beyond your ability to predict), and kick the kids out. Yes, it'll suck for the kids, but not as much as drowning in their own fluids would. And if anyone comes after you with a lawsuit when the dust clears, you'll be on a much sturdier position from which to defend your actions.