No security deposit on a commercial property?

[Steve Ma]

Came to find out my elderly relative in her 80s has two properties rented out to the same person, but she has no security deposit in hand for either (one commercial, one residential)

Residential property - lease states 1 month security deposit required, but the tenant never paid it. Owner forgot about it and they re-signed a new lease, no raise in rent. Tenant still owes it years later. Otherwise, pays rent regularly (two weeks late, but regular)

Commercial property - there was a 1-month security deposit in the first lease, but lease stipulated that the owner would return it to tenant after one year, which she did. Owner doesn't really remember why deposit return clause existed, but she had a hard time finding a tenant 5 years ago.

Real estate agent says this return of deposit "isn't unusual" (?) but doesn't recall precise reasons why from 5 years ago. Speculates it was because property was rented out "as is" and tenant bore substantial remodeling costs. Owner also gave tenant a substantial discount on the rent (40% less than previous tenant).

Now the commercial lease is overdue to be renewed (March 1). Owner and tenant have agreed to re-do the previous lease, with a rent increase of 30% -since the initial lease rent was reduced substantially. The tenant has signed the lease and is sending it back for her counter-signature.

However, I am concerned that there is STILL no security deposit. Agent says we can negotiate it still if we want but is asking "what is the rationale?"

Am I overreacting? I am just trying to look out for family, but I also am wary of meddling, as I am a lifelong tenant with little experience in these issues from a landlord perspective

As for are they good tenants? They pay late every month, but consistently. Owner says they are constantly haggling over this cost or that. Their business (restaurant) doesn't seem to do very well from an outside perspective (no cars out front). As mentioned, tenant never paid security deposit for residential property. The reason why the lease hasn't been signed already is that tenant changed the names on the lease without telling anyone and a lawyer/notary had to get involved. Tenant called owner last week and pretty much demanded rent reduction (more or less ~ "we can't pay all of it, we won't pay back the difference, we know you need whatever we can pay you, you won't find other tenants in this economic environment"). I happened to be in earshot and which is how I got involved. They did eventually pay 2/3 normal rent for the commercial property (and also 2/3 for the residential, which was not discussed but unilaterally decided by tenant)