The concept of a bill of sale has evolved over the centuries and has been adapted to fit the needs of different societies and legal systems. Bills of sale are used in various contexts, including the sale of vehicles, real estate, and personal property. A bill of sale is required in most jurisdictions when transferring property, and therefore it must be properly executed and recorded to be legally binding.
If you are going to sell an item or property, this article will guide you on how to write a bill of sale to ensure no disputes will arise in the future. The article will also discuss what is included in it, its various types, and some frequently asked questions. Free downloadable templates are also provided to ease the generation of a bill of sale.
What is a Bill of Sale?
A bill of sale is a legal agreement that records the transfer of ownership of property from one party to another.
Depending on the jurisdiction in which it is executed, a bill of sale can also be referred to as:
- Proof of purchase
- Deed of sale
- Sales receipt
- Proof of payment
- Proof of sale
- Sales slip
- As-is bill of sale
Proof of purchase outlines the names and addresses of the buyer and seller, a description of the property being transferred, and the terms of the sale, including the price and any contingencies.
Before creating this document, the seller and buyer must first agree on the terms of the sale. Once these terms have been agreed upon, the parties can draft this legal document by hand or using a pre-printed bill of sale template. Both parties must sign the document in the presence of one or more witnesses. It may also need to be notarized with the appropriate agency to aid in its legal execution.
Once a proof of purchase document has been executed, the buyer becomes the owner, and the seller is no longer responsible for the property. The seller can then use it to establish a transfer of ownership to obtain a title or register the property with the appropriate government agency.
Bill of Sale Templates
You can download the following templates for free:
Note: A bill of sale differs from a sales contract. A sales contract is a legally binding agreement between a buyer and a seller in which the terms of the sale of goods or property are outlined, including the price, delivery, and any warranties or guarantees. This document records the future sale. On the other hand, a bill of sale serves as proof of the transfer of ownership of an item from the seller to the buyer. It includes details such as the date, the names of the parties involved, and a description of the item being sold.
When is a Bill of Sale Used?
It is used whenever property ownership is transferred from one party to another in exchange for payment. It is a legal agreement that records the terms of the sale and serves as proof of ownership.
A deed of sale is thus used for transactions such as:
- Vehicles, such as cars, trucks, motorcycles, and boats
- Real estate, such as land, houses, or buildings
- Personal property, such as furniture, appliances, or household items
- Business assets, such as equipment, inventory, and intellectual property
Types of Bills of Sale
There are different kinds of documents that can serve as proof of the transfer of an asset, depending on state guidelines and the type of item. Some of the most prevalent types are listed below:
Absolute bill of sale
An absolute bill of sale transfers property ownership from the seller to the buyer with no conditions or contingencies attached to the transaction. The transfer is complete and irrevocable once the deed is signed and executed. This is generally used when the buyer pays for the property in full and has no outstanding debts or liens. No security is outlined for this type of deed.
Conditional bill of sale
A conditional bill of sale is used as a type of security for a financial institution lending money to the buyer. A conditional bill of sale is used when the buyer cannot pay for the property in full at the time of purchase. If the buyer is unable to pay back the loan in full and at the specified time, the financial institution has the right to seize the property.
Quitclaim bill of sale
A quitclaim document represents the transfer of ownership of an item or piece of property from one party (the seller) to another (the buyer) when the seller cannot make any guarantees about the property. Quitclaim deed does not promise that the property is free from any obligations or liens.
Bill of sale with warranty
The seller guarantees certain aspects of the transferred item with a warranty. It may consist of a guarantee that the item is in a particular condition or meets specific standards. The seller may also guarantee that the item is free of liens or outstanding issues.
Vehicle bill of sale
A vehicle bill of sale represents the transfer of ownership of a motor vehicle from the seller to the buyer.
It details the date of sale, the names and addresses of the seller and buyer, the description of the vehicle, its registration and VIN, and the purchase price. It is essential to have proper proof of purchase when selling a vehicle, as it can be used to register it in the buyer’s name.
How to Write a Bill of Sale
Before drafting a bill of sale, one should contact a local government agency to see if any guidelines need to be adhered to. Templates can also be downloaded from this website and customized to the required preferences to ease the process of preparing a document that serves as proof of purchase for real estate transactions.
However, you can also draft a document yourself to use as proof of purchase by using a word processing program and following the steps below:
Include personal details
Both the seller and the buyer should provide their personal information in two separate sections, with the seller’s information listed first in the format shown below:
[Seller’s Name]
[Seller’s Address]
[Seller’s Phone Number]
[Buyer’s Name]
[Buyer’s Address]
[Buyer’s Phone Number]
Information such as the driver’s license or social security number may also be included.
Write the description of the item
Give an accurate and detailed description of the item. When describing the item:
- Include the make and model of the item, if applicable.
- Describe the condition of the item. Is it new, used, or refurbished?
- Include the serial number if it has one.
- List any included accessories or attachments.
- Detail any defects or damage.
For example, when selling a vehicle, you can describe the vehicle as shown below:
I, [Seller’s Name], am selling to [Buyer’s Name] a [year, make, and model] vehicle in [Good/Fair/Poor] condition. The vehicle’s registration number is [Registration Number], and the VIN is [VIN]. The odometer reads [mileage] miles. The following accessories [accessories] are included with the vehicle.
You can also include a photo of the item, which can help prevent misunderstandings or disputes later.
Outline payment details
Include information about how the buyer is paying for the item. This can include:
- Price of the item, either as a specific dollar amount or as a negotiated price.
- Payment method, whether the buyer pays in cash, by check, with a credit card, or by another method.
- Payment schedule, i.e., number of payments, the amount of each payment, and the due date for each payment if the entire payment is not upfront.
You can outline this information in the format shown below:
Purchase Price: $[Purchase Price]
Payment Method: [Payment Method]
Payment Schedule: [Payment Schedule]
Provide any additional information
Mention any other relevant terms related to the sale. Some examples of additional information that you can provide include:
- Warranty information.
- A statement indicating that the item is being sold “as is.”
- A statement disclosing that the buyer is responsible for paying any taxes or fees associated with the sale.
- A statement indicating that the buyer assumes all liability for the property once the sale is complete.
Additional information can be listed in the format shown below:
Additional Terms and Conditions:
–A one-year warranty covers the purchase.
–The buyer is responsible for paying any associated taxes and fees.
–Buyer assumes all liability once the sale is complete and is advised to purchase insurance.
Include any loans or liens
If the item has loans or liens, list that information in this section. Be accurate and specific about any loans or liens to ensure that all information is comprehensive and the transaction is conducted transparently. When mentioning loans or liens, include the following information:
- Name of the lender, for example, a bank, credit union, or any other financial institution with a loan or lien on the property.
- Amount of the loan or lien
- Additional information, including the interest rate and repayment schedule.
Present this information in the format shown below:
Loans:
[Lender Name]: $[Loan Amount]
[Loan Terms and Conditions (e.g., Interest Rate and Repayment Schedule)]
Frequently Asked Questions
Who signs a bill of sale?
A bill of sale should be signed by the buyer and the seller because the document is intended to transfer ownership of an item from one person to another, and therefore, both parties must agree to the terms of the transaction. In some cases, a witness may also be required to provide a signature, especially if the item being sold is of high monetary value.
What is an ‘as is’ bill of sale?
An “as is” bill of sale is used when a buyer purchases an item with all its faults, visible or not. When an item is sold “‘as is,” the seller is not responsible for providing any warranty, and the buyer assumes all risk for the item’s condition. An “‘as is” sale document is primarily for used boats, vehicles, equipment, etc.
Is a bill of sale a legally binding document?
Yes. A bill of sale is legally enforceable. When both the buyer and the seller sign it, it becomes legally binding and is enforceable in a court of law.
Can a bill of sale be handwritten?
Yes. A handwritten proof of purchase can be as legally binding as a typed one, as long as it includes all necessary information and is properly signed and dated. Using a typed document is advisable, as it is easier to read and understand than a handwritten document. If you decide to write one by hand, ensure that it is legible and easy to read.
Which states require a bill of sale to be notarized?
Not all states require a notarized bill of sale. In some states, it is legally valid when both the buyer and the seller sign it. However, a sale document must be notarized when selling a vehicle in the states of Louisiana, Maryland, Montana, Nebraska, New Hampshire, West Virginia, and Wyoming. You should check the laws of your state to determine whether or not a bill of sale needs to be notarized.
Is a bill of sale required when a property is given as a gift?
A bill of sale is used to certify the transfer of property ownership in exchange for payment. As such, it is not required when a property is given as a gift, as there is no exchange of money involved. However, you should always document the transfer of ownership, whether it is being sold or gifted. If you are gifting a property to someone, consider using a gift deed or a gift letter to document the transfer of ownership.
Do I need a lawyer to prepare proof of purchase?
Seeking legal counsel before finalizing any major transaction is advisable, especially if the property you buy or sell is of significant value. A lawyer can review the details of the transaction and advise you on your legal rights and obligations. They can also ensure that the document is appropriately executed and meets all necessary legal requirements.