@Dasha53 For years we rented out our 3 bedroom vacation home with detached garage. We had a “security resident” who lived in the garage. This was disclosed in the listing. Note: While IN the house, the renter had the ability to deadbolt the doors against entry by anyone outside the house, including housekeeping and the security resident.
The owner in your case should have been more transparent about the presence of her son “living” in the garage with his family. From your description, it appears that the garage was attached to the house.
Lots of people rent property that connects to other properties or have the owner living next door, close by, in the basement, on the top floor behind a locked door, etc. As long as there are separate entrances and the means to properly lock one part away from another, Yes, you may have over-reacted.