Last Updated May 5, 2022
What is a Bill of Sale?
A Bill of Sale is a form a seller uses to document the sale of an item, such as a car, to a buyer. The main purpose of a Bill of Sale is to record the transfer of ownership from the seller to the buyer.
Both parties should retain a copy of the signed Bill of Sale as proof that the transaction took place.
A Bill of Sale is only useful for transactions in which the buyer pays for the item in full and accepts its condition at the time of the sale. If you need a contract that allows you to include warranties or outline a payment plan, a Sales Agreement form should be used.
A Bill of Sale is also known as a/an:
- Proof of purchase
- Proof of payment
- As-is Bill of Sale
- Proof of sale
- Sales slip
- Sales receipt
What is an "as is" Bill of Sale?
"As is" means that the item is being sold in its current condition and the buyer accepts the item with all of its flaws. This means that a Bill of Sale cannot include any warranties and a seller can't guarantee the quality of the product to the buyer.
With an "as is" Bill of Sale, the seller isn't liable for any imperfections or flaws in the item, provided they haven't hidden or lied about them. Therefore, a Bill of Sale protects the seller from having to provide a refund for any item-related issues after the buyer pays and receives the item.
Our Bill of Sale template automatically includes a statement that the property is being sold in "as is" condition, so you do not need to add this detail as an additional clause.
When should I use a Bill of Sale?
Anyone looking to buy or sell an item should use a Bill of Sale. A Bill of Sale is most commonly used when someone is selling a car privately. However, our Bill of Sale template can be customized for a variety of items, such as:
- Motor vehicles, such as cars, trucks, and motorcycles
- Travel vehicles, such as trailers, RVs, and campers
- Watercrafts, such as boats and jet skis
- Mobile homes
- Aircrafts
- Off-road vehicles, such as bicycles, dirt bikes, golf carts, and snowmobiles
- Equipment, such as tractors, tools, appliances, and exercise equipment
- Firearms and guns
- Animals, such as horses, cats, and dogs
- Personal property, such as clothing and jewelry
- Electronics, such as phones or computers
Keep in mind that you cannot use a Bill of Sale to transfer the title to a piece of land or real estate. In such instances, you likely need a Warranty Deed or a Real Estate Purchase Agreement.
Additionally, you cannot use a Bill of Sale to document the sale of a business. Instead, you need to use a Purchase of Business Agreement.
Why should I use a Bill of Sale?
A Bill of Sale protects the seller's and buyer's interests and can prevent future disputes and issues. For example, an enforceable Bill of Sale:
- Documents the transfer of ownership: Without proper documentation, it's difficult to prove that a buyer has paid and received an item, especially if they've paid in cash. A Bill of Sale can prove a transfer of ownership and shows the date of the transfer.
- Creates a paper trail: In some situations, a written Bill of Sale may be needed for tax purposes. For example, if you sold a car for a profit, you may have to report that profit as a capital gain. Without a written Bill of Sale, you may not have evidence of the transaction.
- Establishes the item's condition: By using a Bill of Sale, the seller can prove that an item was sold as-is. Without a Bill of Sale, the buyer could claim that the seller sold them a defective item and pursue legal action.
- Documents the payment terms: With a Bill of Sale, both parties can prove the agreed-upon payment terms, such as the purchase price and payment method. If the buyer doesn't provide the full amount, the seller can use the Bill of Sale when pursuing the outstanding amount.
- Allows the buyer to acquire insurance: If an item is insurable, such as a vehicle, the buyer may need to prove that they're the legal owner before they can obtain insurance. A Bill of Sale can allow the buyer to prove their ownership.
- Ensures the proper provisions are included: Although a handwritten Bill of Sale could be considered enforceable, it could be missing important terms or clauses. Our template is customized to your state's laws and includes all the necessary clauses to protect each party's interests.
Do I need a Bill of Sale to give property as a gift?
Although friends and family members may not think it's necessary, they should still be using Bills of Sale when selling to one another. Furthermore, friends or family members who gift items to each other should also use a Bill of Sale to show the transfer of ownership. If you wish to transfer the property as a gift, state that the sale price is a small amount, such as $1.00 or $10.00.
How do I write a Bill of Sale?
To create a Bill of Sale, complete the following steps:
1. Describe the item
Provide the property's details. For example, if you are selling a used car, you will need the following information:
- Make
- Year
- Model
- Body type
- Vehicle identification number (VIN)
- Odometer reading, accuracy, and details
List the name and address of both the seller and the buyer. If necessary, you can add more than one seller or buyer to your Bill of Sale.
3. Outline payment details
State the item's sale price and specify if sales tax will apply to the sale. Also, include the form of payment. Common payment methods that you can use in a Bill of Sale include:
- Cash
- Bank drafts
- Checks
- Electronic transfers
4. Note any loans or liens
If there are any loans or liens against the item, be sure to note them and describe the arrangements for loan or lien repayment. Mainly, you need to specify whether the buyer or seller will pay off the loans.
If a loan or lien is going to pass to the buyer, the seller should reduce the purchase price by the corresponding amount.
Can I use a Bill of Sale for selling services?
When providing or hiring services, it's more appropriate to use a document like a Service Agreement or an Independent Contractor Agreement. A Bill of Sale only works where there is a transfer of ownership of physical goods.
Who signs a Bill of Sale?
In some states, when you're selling a vehicle or other important items, the buyer and the seller may have to both sign the Bill of Sale. For other types of items, such as furniture, only the seller may have to sign the Bill of Sale.
Once you specify your location and the type of item, we automatically customize your document to only include space for the necessary signature(s).
Therefore, the involvement of the buyer and seller in the signing process is dependent on your jurisdiction. For further information, check your local or state laws.
Does my Bill of Sale need notarization?
Most states do not require you to have your Bill of Sale notarized. However, if you are buying or selling a vehicle in one of the following states, you may need to have your Bill of Sale notarized:
Regardless of where you live, you can always decide to have your document notarized if you want your Bill of Sale to have an extra layer of verification. This verification is useful if there's a future dispute. Getting a notary public to witness signatures helps prove the document's authenticity.
