MONTREAL -- Under Quebec law, for decades, landlords haven't had the right to demand damage deposits from their tenants, but suddenly that seems up in the air after a ruling by the provincial housing board.

The ruling, which revolved around a tenant from France who didn't know Quebec law, has created a new battle between landlords' and tenants' groups, with the landlords' association even telling members to go ahead and ask for deposits and see if they hold up in court.

Housing rights experts, meawhile, say that creating any flexibility on this point, in a housing market as tight as Montreal’s right now, will quickly make deposits near-mandatory for all tenants.

"The law hasn't changed, but what it's going to do now is it's going to put tenants who are looking for a dwelling into a corner," said Ted Wright of the Westmount Legal Clinic, who advises on many housing cases.

"They will know if they don’t agree with the landlord to have a damage deposit, then he’ll say 'no lease.'"

The Regie du logement, after its ambiguous ruling, hasn't provided any legal clarity.

The board heard a case involving a tenant from France who volunteered to pay a deposit without knowing that Quebec law bans them. The landlord accepted it, and the Regie ultimately said the deposit was valid in that case.

For the Quebec Landlords' Corporation, the logic behind this one ruling should be extended to all other cases. The group now wants the Regie to allow all landlords to take damage deposits if tenants agree, on a case-by-case basis.

In those cases, said the group's spokesperson, Hans Brouillette, tenants will essentially be agreeing that "I understand that I have protection from the law, but I renounce this protection because I could have an advantage."

He argues that the option will be in many tenants' favour since it could help secure housing for people with bad credit or who raise some kind of other red flag for a potential landlord.

Several tenants' rights groups are now asking the Regie to clarify the situation because of the same ruling.

A Quebec association representing people who are retired or approaching retirement said there's no ambiguity in provincial law on this point—it bans landlords from taking any money other than rent from tenants.

But the new proposal would quickly "in effect, become a key condition for signing the lease," the group, called the AQDR, wrote in a release.

"We don’t want to go back 40 years to when landlords demanded a substantial deposit just to get a copy of the key," said its president, Pierre Lynch.

"This practice was banned when the Regie du logement was created in October 1980. And it must remain so for the sake of tenants who often do not have the means to deposit sums of money."

The Regie did not respond to several requests from CTV News for clarification on the ruling or law.

For now, Wright said he's advising his landlord clients not to ask for damage deposits based on that one ruling—in the long term, he said, the deposits may not stand up in court if it comes to that.

"I would tell my landlord clients 'Don’t do it,'" he said. "Pick your tenants wisely, but do not ask for a damage deposit because in a contract-signing situation it makes [the two parties] unequal." 

The landlords’ association, however, is giving different advice. The damage deposit provision is one that the association has been trying for years to change. It says it stands by its interpretation of the one Regie ruling and its members can act accordingly.

"If it’s not legal, then go court, get a decision from the court that’s different than our decision," said Brouillette.