When a Montreal landlord stopped by to check on one of her units last weekend, she was shocked to find a group of strangers in the apartment. The tenant was nowhere to be found.

"I asked to see the tenant that lives there and they said 'no' we're renting by Airbnb and we're going to Osheaga," landlord Manon Letarte Pettas told CTV Montreal.

Airbnb is a website where travellers can rent people's homes or apartments, often for less than the cost of a hotel, and enjoy some of the comforts of home.

Letarte Pettas was upset because she is renting out the place for $1,440 a month while the tenant was renting out the place for $170 a night with a two-night minimum stay. If the tenant rents the apartment for 30nights in a month, that's a profit of $3,660.

The thousands of people who descended on Montreal last weekend for the annual Osheaga Music and Arts Festival would have had their choice of more than 1,000 listings on Airbnb in the city. On busy weekends like last one, prices can go up to $400 a night for some units.

But depending on how people use Airbnb it isn't entirely legal.

Renting out a place falls in a grey zone in the law: Montrealers are allowed to rent their apartments on the website, but tenants who start turning a profit thereby turn their lodgings into a commercial establishment and may require a permit.

"If you want to live there, you will rent on a long-term basis and if you turn this into a bed and breakfast you are changing the kind of activity," Hans Brouillette of the Quebec Landlord Association told CTV Montreal.

The law in Quebec requires anyone renting out a place for less than 31 days to obtain a $250 permit. In addition, renters must be covered by at least $2 million of civil liability insurance for each claim. They must also pay a host tax of $2-3 per night to Revenue Quebec. Fines can be as steep as $2,250 per day for the first offence.

"Every time you sublet your dwelling for a week or more, you have to give notice to your landlord of your intention," Denis Miron, a spokesperson for Regis du Logement, told CTV Montreal.

By law, landlords have to approve any sublet and if a landlord finds out it's happening without their authorization they can file a claim with the housing authority called Regis Du Logement.

Airbnb launched in Montreal in 2008 and it isn't the only city trying to figure out how to deal with the service.

In New York City, the hotel industry fought back and it is now illegal to rent your home for less than 30 days. In Paris, a 20-person team makes unannounced visits to apartments suspected of being unlawfully rented to visitors.

The Wall Street Journal reports Airbnb to be valued at about $10 billion.

With files from CTV Montreal's Natalie Nanowski.