How To Write a Bill of Sale

How To Write a Bill of Sale

A bill of sale is a legal document that serves as evidence of the transfer of ownership of a property or object. This document provides basic information about the item and offers some protection for both buyer and seller in the event of any future dispute about the transaction.

For example, suppose a disagreement arises over the condition of a used car. In that case, the warranty included in the bill of sale can help the seller prove that it was an "as is" sale and that they made no guarantees on the vehicle's performance.

Laws for the different types of bills of sale vary from state to state. For example, some states require them for the sale of a car, and others don't. Some state departments of motor vehicles (DMVs) or county tax collector offices provide templates for the sales of vehicles or property. You also can write your own bill of sale.

What Are the Necessary Components of a Bill of Sale?

A bill of sale should always include the following information:

  • Date of the transaction
  • Seller's name and address
  • Buyer's name and address
  • A description of the item, including any serial numbers, identification numbers, make, model, size, color, and any distinguishing features or faults.
  • Special conditions to the sale (such as sold "as is" or "with warranty")
  • Previous owner details
  • Selling price (written both in words and in numerals)
  • Payment method (such as paid in full or in installments and cash, check, credit card, or bank deposit)
  • Other agreements (such as payment due dates, late fees, and interest rates)
  • Signatures for all parties involved in the sale

If the bill of sale is for a vehicle, the bill of sale should also include the following details:

  • Vehicle identification number (VIN) or serial number if no VIN
  • Vehicle body type
  • Make, model, and year of the vehicle itself
  • Current odometer reading
  • For boats, you also need the hull number

What are the Different Types of Bills of Sale?

Since every state has its own guidelines for bills of sale, it's critical to find out the rules of your state so that your bill of sale is in compliance. Here are the most common types of bills of sale.

Absolute Bill of Sale. This document represents the sale or transfer of goods. It does not represent security in the title.

Bill of Sale with Warranty. In this type of bill of sale, the seller guarantees that they own the property and have the right to transfer it.

Conditional Bill of Sale. This document shows proof of the transfer of personal property as a form of security to a creditor. If the debtor is unable to pay back the loan, the creditor has the right to personal property.

Quitclaim Bill of Sale. A seller uses this type of bill of sale when they do not want to warrant title or cannot guarantee that they own the property.

Vehicle Bill of Sale. This bill of sale documents the transfer of ownership of a motor vehicle. Some states require a bill of sale to obtain the vehicle title.

Frequently Asked Questions About Bills of Sale

Do I need to write a bill of sale for my transaction?

A bill of sale protects buyers and sellers, which is especially important in transactions involving items of significant value such as cars, motorcycles, boats, or planes.

Many states require a bill of sale as proof of purchase of vehicles or animals. For items of less value, the buyer and seller can decide if they want a bill of sale for a transaction.

The following 16 states require a bill of sale for car, truck, and recreational vehicle sales:

  1. Alabama
  2. Arkansas
  3. Colorado
  4. Connecticut
  5. Hawaii
  6. Idaho
  7. Maine
  8. Nebraska
  9. New York
  10. Ohio
  11. Rhode Island
  12. South Dakota
  13. Vermont
  14. Washington
  15. West Virginia
  16. Wyoming

Some states require a bill of sale to be notarized. In Louisiana, Nebraska, Maryland, New Hampshire, West Virginia, and Montana, for example, the buyer and seller must sign the document before a notary public.

Is a bill of sale legally binding?

A bill of sale is a legal document that provides a record of an agreement to sell and receive the goods. Since rules can vary by state, it is essential that buyers and sellers comply with their state requirements.

Who writes the bill of sale?

The seller typically writes the bill of sale. In many cases, sellers can use an online template. A handwritten bill of sale is also valid as long as it contains all the required information, is legible, and is signed by all parties. The seller should carefully review all the information in a bill of sale before signing the document.

Is a bill of sale the same as a title?

No. A bill of sale provides proof of the transfer of ownership between a seller and a buyer. A majority of states require bills of sale for the purchase of vehicles or large animals to register ownership. A title is a legal document that certifies ownership of the vehicle.

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