Risks with "Cash-Only Deals"

When building or renovating a home, naturally everyone wants to get the best deal, which is why some consumers choose to hire contractors who work for cash and do not provide a written contract. Consumers who make thee "cash only" deals usually assume that the contractor is only cheating on taxes in order to offer the low price. Unfortunately, to avoid taxes, underground contractors cannot have any paperwork. Without anything in writing the consumer faces considerable risks, such as:

• The contractor does not finish paid work - If you do not have a contract, it will simply be your word against theirs
• The contractor damages your home - If the contractor is working underground, they probably will not have insurance, and you will be stuck with the damage costs.
• A worker is injured on your property - Most contractors working underground will not have Workers Compensation coverage and you would therefore be liable.
• The contractor does not pay his suppliers or subcontractors - Without a written contract, you probably will not have a lien holdback provision and would have to pay off the contractors debt.

To avoid these financial and legal risks follow the Get it in Writing steps and make sure your contract includes proof of liability insurance and Workers Compensation coverage, a lien holdback provision and clear responsibility for compliance with all other applicable laws and regulations.

Get it ALL in Writing

Step One
Know who you're dealing with - Good contractors have satisfied customers. If a contractor is unwilling to provide references, don't hire that contactor.

Step Two
Make sure you're protected from risks - When a contractor works on your home, you need to be protected from a number of risks. These risks exist whether you are hiring someone for a simple home repair, a large renovation project, the construction of a new home or cottage, or to work on a rental property you own.

Step Three
Get it in Writing! Having a written contract is essential. It help protect you from the nightmare of lawsuits that can result from accidents, work-related injuries, or damages to third parties. Even for small projects, it's important to make sure you're protected. The size of the job does not limit the liability you face if an accident occurs.

Most often, the contractor will draw up a contract for you to review. Don't sign it unless you are satisfied that it includes all the necessary information and accurately represents what you've agreed to.