When purchasing or buying an item, even one of modest value, a Bill of Sale helps document the terms of the transaction.
A Bill of Sale is a legal document explaining the details of a sale. In other words, when you purchase or sell an item, you can use a Bill of Sale to record the transaction to protect it from being contested at a later time.
Typically, a Bill of Sale is only used to document valuable transactions, such as selling a vehicle or other valuable items. Most states require a Bill of Sale to accompany the private sale of a motor vehicle for sales tax assessment and ownership transfer at the DMV, so it’s a good idea to check your local laws before selling or purchasing valuable items.
However, a Bill of Sale can be used to document any sale, regardless of the amount of money in question. It’s not usually necessary to use a Bill of Sale to document a transaction recorded by other means, such as a receipt or an invoice.
Depending on your state, a Bill of Sale may also be known as:
Proof of Purchase
Statement of Sale
Note of Purchase
In theory, anyone who wants to document a transaction legally can use a Bill of Sale to do so, as long as both parties agree to sign it. In practice, a Bill of Sale is only required for a few specific types of transactions and is broadly recommended for high-value transactions.
Typically, the onus is on the seller of the item to draft a Bill of Sale, but either party can create the document. A Bill of Sale protects the seller to a large degree because they will have to prove ownership of the item if there is a dispute in the future.
As a buyer, you’re well-advised to be prepared with your own Bill of Sale if you’re purchasing a vehicle. Vehicle sales often require a Bill of Sale, and some states demand a signed, dated, and even notarized Bill of Sale to complete the purchase of a motor vehicle.
A notable exception is the sale or purchase of real estate documented in a Real Estate Purchase Agreement and transferred via a deed.
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A Bill of Sale needs to accurately reflect the terms of a sale if you want it to protect your rights surrounding the transaction effectively. With our proprietary form generator, all you need to do is answer a few simple questions, and we will create a Bill of Sale that conforms to your specific needs.
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To create your document, please provide:
Buyer: Full name and address of the person purchasing the item.
Seller: Full name and address of the person selling the item.
Item Description: A detailed description of the item in question. In the case of vehicle sales, this section needs to include specific information about the vehicle, including the make, model, color, VIN, model year, type of body, odometer reading, and other details depending on the state laws governing the sale.
Excluded Assets: Any items specifically excluded from a sale. This section is used for sales that encompass a category of items, such as everything inside a building. Any assets in the building, but aren’t part of the deal, should be expressly detailed.
Consideration: Anything given in exchange for the items in question. In this context, it typically refers to an amount of money.
Forwarding Address: If you haven’t already, give your landlord an address to send your security deposit and any notices once you’ve vacated the property.
Additional Terms and Conditions: Any other clauses that you need to include would go in this section. This may include conditions for the sale to be completed or other special agreements.
Acceptance: In legal terms, acceptance refers to the unconditional agreement of the exact terms in a document.
Absolute Bill of Sale: A Bill of Sale that transfers ownership entirely and without restriction from the seller to the buyer.
Conditional Bill of Sale: A Bill of Sale that records a transfer of ownership that will happen when certain conditions are completed, usually accompanied by a Promissory Note.
A Bill of Sale must be signed by both the buyer and the seller to be legally enforceable.
Whether or not you need to notarize the signatures on a Bill of Sale depends on the item in question. If you’re selling personal property other than a vehicle, notarizing the signatures isn’t typically required. However, some states require notarized signatures on a motor vehicle Bill of Sale. Notarizing the signatures is a good idea, in any case, to prevent either party from challenging them later.
Once it’s signed, take a copy of the Bill of Sale to your local county clerk’s office or tax office to record the sale. The Bill of Sale must reflect the sale details accurately since it will be used to estimate your sales and use tax as applicable.
Keep a signed copy of the Bill of Sale for your records and distribute a copy to the sale counterparty. If the Bill of Sale documents a motor vehicle's sale, both the seller and the buyer should contact their local DMV to avoid misattributed tickets and citations until the car is retitled.
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