The Risks of a ‘Cash Deal’ Home Renovation

As the old adage goes, ‘your home is your castle’, and many of us enjoy spending time and money making our homes an enjoyable place to live, play and work. We all want to save money where we can. When you’re looking at updating your kitchen or finally finishing your basement there are some corners you shouldn’t cut — like agreeing to a nothing-written-down cash deal instead of a insisting on a proper written contract.

Find out what you can expect from a cash deal contractor.

Why should I avoid a cash deal?

A cash deal is when someone offers to do the work, often for less money, if you pay cash.The catch is that nothing gets written down. The underground economy exists largely due to these types of cash transactions. These businesses don’t claim the income and fraudulently avoid paying taxes, Workers’ Compensation, and business insurance, much of which is illegal.

Unfortunately for homeowners, cash deals also mean no paper trail. No contract, no receipts and no warranty. This means you have no proof of payment and no way to hold the contractor accountable for what they promised. In short: no protection. It means putting your home, yourself, and your family at risk. Starting to look less like a ‘deal’?

Photo: Award-winning home renovation by Alair Homes

What are the risks of a cash deal renovation?

Without a written contract, you may be at risk of:

• Unfinished or second-rate work — Home owners can get a written contract that states what’s agreed to, otherwise there’s little or nothing you can do if the project is not completed or the work is inadequate. Without a contract, you have no recourse.
• Accidents or injuries — Should a contractor accidentally damage your home and not have business insurance, it’s up to him/her to agree to pay for repairs out of pocket. The same can apply if a worker gets injured on the job. Without required Workers’ Compensation coverage, you may be liable for their medical costs.
• No warranty — If something needs repair after a renovation, without a written contract you’re likely out-of-luck. There’s no way to hold the contractor responsible for making good on their promises.

How do I avoid a risky renovation?

Do your research before you begin. Understand the ins and outs of a renovation project. This means finding a reliable contractor who’s right for your type of project, learning what is included in a smart contract (which clearly states your responsibilities as a homeowner, as well as the contractor’s responsibilities) and more.

Reliable contractors provide a proper written contract! It doesn’t matter how big or small the project. If you’re working with a qualified contractor, he/she recognizes the value of a written contract and doing the job right, the first time. Find a professional in your region, here.

For more renovation tips, visit www.getitinwriting.ca and follow us on Facebook and Twitter!