Everyone loves a bargain. But when it comes to hiring a contractor to work on your home, a "special cash price" can mean a lot of extra risks.

It's no secret that some contractors offer to do work for unrealistically low prices. Part of the "deal" involves paying them in cash without a written contract or a receipt for monies paid.

Homeowners who get involved in cash deals usually assume the contractor is cheating on taxes in order to offer the low price. They also assume that the contractor is the one who runs all the risks-after all, it is the contractor, not the customer, who ends up not declaring the income on their tax return.

In reality, underground cash deals involve a lot more than evading taxes-and considerably more risk than homeowners imagine.

Whether it involves new home building, a cottage, a major renovation or something less substantial like roofing replacement or kitchen remodeling, residential construction is a fairly complex business.

• Municipal building codes, permits and inspections make sure things are done the right way.
• Provincial regulations govern the health and safety of workers as well as hazards related to equipment and chemical use.
• Workers' Compensation programs protect workers injured on the job.
• Contractor liability insurance protects customers in the event of an accident, damage to the home during construction, or damage or injury to third-parties such as the homeowner's family and neighbours.
• A written contract sets out what the contractor will do, the work schedule, the price you will pay and the terms of payment.
• Provincial lien regulations limit the homeowners' liability in the event that the contractor fails to pay suppliers and sub-contracts.
• A written warranty provides customers with some assurance that they will get what they pay for.

Taken together, these measures serve to protect customers. They reduce the chance that serious mistakes will be made. And they provide protection for the customer in the event that something goes wrong.

However, all of these measures require "paperwork" and records-something underground contractors must avoid for fear of being caught for cheating on taxes. And that is the real secret behind the underground contractor's low price. When you get involved in a cash deal, there is a lot more than taxes being evaded.