A Bill of Sale Form is a binding document that works to transfer the ownership of one item, in this case, a car, to another person.
Selling a vehicle can be an arduous process. It can take time, effort and can also be rather confusing if you are not certain of all the terminology and paperwork that needs to be filed. Learning what a bill of sale form is, what it is used for, and when to use it can help sell your car faster and simpler.
This document contains detailed information about the buyer, the seller, the vehicle itself, and the sale terms. It is used to make sure that the vehicle is fully and legally transferred from one owner to another and that all terms are clear and well-defined so that both parties are informed of the terms of the sale.
For those seeking to register a vehicle, a bill of sale form is required to make sure that the car’s ownership has been transferred and that the registration can then be transferred as well. A bill of sale form is also required to get a new title on the vehicle. The title is also required if you want to transfer ownership to register the vehicle and ensure that the owner is established with the DMV of the state in which the car is to be registered each year.
The seller must sign a bill of sale form to register a vehicle in most states.
What is a Certificate of Title?
The title is the document that goes with the car for each sale or transfer of ownership made. This document is issued by the DMV of the state where the vehicle is being sold and contains information about the car specific to that vehicle.
What is the Purpose of the Title?
A title is used to help establish a few different things about the vehicle itself. First, it is issued by the state that the car is registered or sold in and contains valuable information about the vehicle. Second, the DMV issues the title in the state where the vehicle was sold and is kept on record until the car is sold and ownership can be transferred. Third, it would contain information about the make, model, year, VINs, odometer reading when the vehicle was sold, weight class, and any information about lenders if a loan were taken out to pay for the vehicle. This is the essential document, along with the bill of sale form, tied to each car specifically.
Importance of a Bill of Sale
So, why is a bill of sale form so important? A bill of sale form is essential for a few different reasons; it helps create a legal and binding record of the transaction. This transaction receipt can be used in ownership disputes for the duration of the car’s life. It can be used to prove that the ownership of the car transferred and that a new owner is in place, and it helps to record in-depth information about the vehicle, the seller and the buyer, and any specific terms of the deal that were put in place at the time of ownership transfer.
It also allows the new owner to register the vehicle in the state and the county in which the new owner lives. All DMV requires that you provide a bill of sale form to transfer the registration from one owner to another. Registration determines who pays taxes on the car each year, where the tags are sent if you order them by mail, and where the taxes will be paid.
The bill of sale form also helps to establish legal ownership and proof of whom the true owner is. This means that if someone were to take you to court and claim that you are not the valid owner of the vehicle if you have a bill of sale form stating that you purchased the car, it is yours, and proof of ownership can be established. It can also provide a history of the vehicle, how it changed hands, who originally owned it, and more.
A bill of sale form can also help to prevent fraud. It helps to ensure that the car you purchase and agree to purchase is the car you get when the transaction concludes. It also provides liability protection for both the seller and the buyer, ensuring that both are fully aware of the sale, the state of the car or vehicle being sold, and the terms of the sale as it occurs.
When to Use a Bill of Sale Form
Using a bill of sale form is important in any case where ownership of one piece of property is being transferred from one person to another. This can be nearly anything you might purchase from one person and have to prove ownership of later down the road. If you are buying or selling something of value and that you may have to prove ownership of later, a bill of sale form is an ideal document that helps protect both the buyer and the seller and that is binding.
A bill of sale form can be used for nearly any transaction in which a piece of property changes hands from one owner to another. For example, it can be used to sell a vehicle, as we have discussed here. It can also be used when selling things like a boat, a piece of farm machinery, an animal such as a horse or livestock, even pets like cats and dogs. A bill of sale form will provide a record of any transaction in which property changes hands and is valuable for both the buyer and the seller.
A bill of sale form can be thought of in some ways as a more detailed receipt. However, instead of just listing the item and how much was paid like a receipt you might get at the grocery store, it contains information about the item, the terms, and the actual sale itself that can be referred back to later, need be.
Types of Bill of Sale Form
There are hundreds of different bill of sale forms that you can use when completing a transaction with another person. You can take primary forms and tailor them to your needs, the specific item you sell, and the terms accompanying that sale.
Some common types of bill of sale forms are as follows:
- As-is
- Firearm or gun
- Jet Ski
- Motorcycle
- Trailer
- ATV
- Furniture
- Livestock
- Notarized Bill of Sale
These will all be specific to the transaction and may have different terms and information that needs to be provided to make the bill of sale form as specific and detailed as possible.
Difference Between a Bill of Sale and Sale Agreement
These two documents, though they might seem similar and may have similar qualities, are two different documents that refer to the Sale of Goods. A sales agreement is a document that allows the seller and the buyer to enter specific details about the sale itself. This might be how much was paid, what type of payment was used when the item was sold, and more. It pertains mainly to the sale itself and its terms in a slightly more detailed manner.
A bill of sale form is more of a proof of purchase or a receipt, and if it is notarized, it is a bit more binding and can be used to prove ownership and prove that the sale took place and all parties were satisfied with it the sale and its terms.
Key Terms of a Bill of Sale Form
You should be aware of some specific terms associated with a bill of sale form; knowing these terms can help you better understand the process and what to include on the bill of the sale being created.
These are:
Buyer
The first is the buyer. This is going to be the person that is purchasing the item. Information like the name and address for this party are generally included in the bill of sale form. This section will also include contact information such as phone number, email, and address so that the DMV or anyone looking at the bill of sale form can contact the buyer and make sure that the bill of sale form is accurate and agreed to terms.
Seller
The seller is also listed; again, information like the name and the seller’s address is likely to be included. The price that was asked and agreed upon for the purchase must also be included, as does the place or the location where the sale took place. It is also important that the phone number and the email, if they have one, are listed so they can be contacted later on if there is any discrepancy or any question about the sale itself that needs to be answered by the seller.
Vehicle identification number and information about the vehicle
The VIN or vehicle identification number should be included in terms of what to include about the vehicle. In addition, a description of the vehicle, including make, model, color, and odometer reading, should be included. In addition, the year that the vehicle was manufactured should also be listed, as should the style of the vehicle, for example, sedan, SUV, coupe, truck, etc. These details will help make the bill of sale form as specific to the vehicle being sold as possible.
“As-is” clause
If the vehicle is sold on an “as-is” basis or sold with defects, the defects and the vehicle’s condition should be part of the bill of sale. This helps ensure that the buyer is aware of all issues and agrees to purchase, despite the defects that might be present.
Payment information
Information about the type of payment should also be included, and this means, was the sale made in cash, was it made with a check, a money order, a card, or was there another financing from a lender? For example, it is important that the actual method of the sale is listed and is part of the information included in the bill of sale form.
For smaller sums of money, cash is often used as a method for payment with cars. However, for cars that are being sold for a larger sum, the buyer may want to use a certified check, a money order, a car perhaps, or if they are financing the car, they will get the sum from a lender.
The type of payment depends on what the buyer and seller are comfortable using. Cash can be tricky for large purchases as you will only have the word of the buyer and seller to go on. With personal checks, you may also encounter holds from the bank to verify the funds before the check can be cashed. With financing, the bank will need to see both parties and make the sum out to the seller rather than to the buyer so they can be given directly to the person making the sale.
Taxes
If the vehicle is gifted from one person to another, say from a parent to a child, this can be included in the Bill of Sale form to help both parties avoid paying taxes on the sale price.
Furthermore, you can also include a trade-in clause on your Bill of Sale form if no money changes hands. For example, you may want to trade two vehicles or trade one vehicle for another item. A Bill of Sale form still needs to be written up, documenting the trade and changing hands so that the car’s new owner can get it registered.
Odometer statement
Your Bill of Sale form also needs to include an odometer statement stating what the odometer was when the sale was agreed upon and that states it was working at the time of the sale.
Notary public and witnesses
Your bill of sale form should also include things like the notary public information if the bill of sale form is notarized so that they can be referred back to later if need be. A bill of sale does not have to be notarized, but it does make it a bit more binding and a bit more solid in terms of legality. If you have any witnesses who see the sale or are present, you can have them sign. It would also help make sure that the endorsement of all parties is included, as are their signatures.
Free Templates
Following are some free downloadable templates for you:
Documents Required to Sell a Vehicle
If you are looking to sell a vehicle in any state, a few different documents are needed; knowing what paperwork and documents you need before any sale helps make the process faster and easier overall.
These documents are:
Title and registration
The first is the title and registration. The title is needed to prove that you are the owner and that you have the right to sell the vehicle, and the registration is to prove that the car has been inspected and can legally be driven on the road.
Bill of sale form
If the vehicle has been sold, you also need to include the bill of sale form so that the DMV can prove that you now own the vehicle and register it and that you are the legal owner. The title cannot be reissued with the new owner unless a bill of sale form is provided to prove that you own it.
Odometer disclosure statement
All state DMVs require that you also include an odometer disclosure statement. This means that if your car is less than ten years old and has less than 16,000 miles on the odometer at the time of sale, the buyer has to verify that. The buyer must also prove that the odometer is not defective and that it is not damaged in any way.
Photo ID
The last thing that is required is a photo ID. There are so many scams these days that all transactions of this type do require a photo ID so that they can ensure you are the person you state that you are and that you have a legal right to sell or to buy the vehicle in question and then transfer the title and registration
Legal Consideration
Depending on where you are selling your vehicle, you may need to have your bill of sale form notarized before you can transfer the title and change ownership.
The states in which a notary is required are:
- Arizona
- Kentucky
- Louisiana
- Montana
- North Carolina
- Ohio
- Oklahoma
- Pennsylvania
In these states, the title must be notarized before it can be used to transfer ownership which means that the transferor the signing of the title over to the new buyer must be witnessed by a notary or a third party.
How to Sell a Vehicle
Selling a vehicle can be difficult.
However, following these steps can help make the process easier and more efficient:
Collect paperwork
When it comes to selling a vehicle, your first step is to collect all the paperwork that has to do with the vehicle before the sale. You need to have the title and registration on hand and any previous bill of sale forms that you might have to transfer the car from one owner to another lawfully. Also, you can refer to the above-mentioned required documents for the selling process.
Determine vehicle value
The next step is to estimate the value of the vehicle. This can be done by using estimation tools or using a book like Kelly Blue Book, or hiring someone to come and estimate the vehicle’s value. This will allow you to accurately list your vehicle for sale and let the buyer know exactly what it is worth and what you expect to get from it.
Knowing how much a vehicle is worth can also give the new buyer an idea of what amount of taxes they will be paying on the vehicle when they move to register it in their name. In addition, knowing the vehicle value will help the seller ensure that they are getting the total value and will also let the seller know how much wiggle room they have with the price and what they are willing to sell the vehicle for.
There are several options when it comes to valuing your car, and you can use resources like Kelly Blue Book, NADA Guides, and Edmunds to find out how much a car of your specific make, model, and year is worth. You should also note any special features like leather interior, heated seats, premium sound systems, and more when entering values on these sites to get the most accurate estimate possible.
Prepare the vehicle for sale
The next step is to clean the vehicle and remove any personal items. This will make it easy to take the car out on test drives and allow you to park it for display. This can also be cleaning the vehicle, taking care of any mechanical issues you want to fix before you sell it, and any other consideration that might make it hard to sell the vehicle.
You should remove personal effects and make sure that it is clean and presentable so that your potential buyers will want to purchase it.
List the vehicle or display it for sale
You should then list the car or post it for sale. You will then need to negotiate the terms of the sale with the person who wants to purchase it so that both parties are clear on what the terms are and what the overall sale entails.
You want to present the vehicle in a way that will show what it is, that is going to list pertinent information if you are using a listing site to make the sale easier. If you are listing your car somewhere, you want to make sure you include high-quality images of the outside and inside. If there is any damage, take photos of that as well. If you are setting your car out to be seen, choose a space where many people pass so that it has the best chance of being seen and purchased.
It would help if you thought of your highest price and your lowest to go into the deal knowing what you are willing to take for your vehicle. In addition, you should make sure that your contact information is visible so that potential buyers can get in touch. Finally, you should make sure you are listing information in an easy to see and easy-to-understand manner.
Complete the sale
- Document the Sale in a Bill of Sale form
- Negotiate taxes
- Discuss and Agree upon the payment method
The last step is to complete the sale. You will need to document the sale in your bill of sale form in detail. This includes information about the vehicle, the sale, and the terms of the sale. You will then need to negotiate sales tax and determine how to pay for the sale. Certified checks are great. Cash and escrow are all options that can be discussed as a method of payment.
Certified checks are issued by the bank and allow the buyer the chance to see that the check is real and that you have the funds available. You can meet the seller at the bank at the time of the check issuance. Cash is a quick method of payment that is good for smaller sums. If you want to escrow, this means putting the funds with a third party that will distribute the funds on a schedule like monthly payments. This is a good option for very large sums, payment plans, and if you and the seller are very far apart.
You should take the time to draw up a detailed and accurate bill of sale form that lists the buyer, the seller, information about the vehicle, and information about the agreed-upon payment and method of payment.
You also need to determine who will be paying the taxes upon the transfer of the vehicle. Will you pay them, is the buyer responsible, and so on. As mentioned, you then want to discuss payment methods and determine how and when the vehicle will be paid for. You do not give the bill of sale to the buyer until the process is complete.
Registration Process
Finally, as the buyer, you should have your paperwork collected and ready for transfer of ownership of the vehicle.
The following steps are going to be the registration process:
Bill of sale form
This document includes all the information about the sale, the terms agreed upon, and the vehicle. This is required to prove that you have ownership of the vehicle and that you have a right to register the vehicle and transfer the title.
Title
In some states, the requirement is that you and the previous owner both sign the old title before the new title can be issued. However, you need the old title to get a new one issued from the DMV, so make sure the seller has given it to you. It should take no longer than 30 days for a new title to be issued to the buyer.
Odometer disclosure statement
An odometer disclosure statement is also needed. This statement is used to show what the odometer is reading at the time of sale. If the vehicle is less than ten years old and has less than 16,000 miles on it, this statement is required to prove that the odometer works and that there has been no tampering.
Proof of car insurance
Proof of car insurance for that particular car is also required before new registration tags can be provided to the buyer. Most DMVs do require a paper card, but you may be able to have proof of insurance faxed from your insurance company to the DMV for proof.
Photo identification
A photo ID is also needed to prove your identity so that your ID can be associated and linked to that car on the computer when the new title and registration are issued.
Fees
Fees that are associated with the registration are also required. For example, if you are changing the registration date to your birthday, you may be required to pay taxes at that time. You may also be required to pay taxes on the total value of the sale and the vehicle at the time of registration. It may also be necessary to pay for your new title.
Emissions test
An emissions test is likely going to be required for your vehicle in some states. In addition, when registering a car in a state that it has not been previously registered, your DMV may require an inspection of the vehicle to make sure that it is safe to be on the road.
If you are unsure of what you need, you can contact your local DMV to find out more about what will be required and what you will need to bring to get your new car registered.
DMV Offices- By State
Out of 50 states, the following do not require registration of the bill of sale form:
| State | Bill of Sale Required? |
|---|---|
| Alaska | No |
| Arizona | No |
| California | No |
| Colorado | No |
| Delaware | No |
| Florida | No |
| Idaho | No |
| Indiana | No |
| Kentucky | No |
| Louisiana | No |
| Minnesota | No |
| New Jersey | No |
| North Carolina | No |
| North Dakota | No |
| Oregon | No |
| Pennsylvania | No |
| South Carolina | No |
| Tennessee | No |
| Virginia | No |
| Wisconsin | No |
Frequently Asked Questions
Do I need a bill of sale when selling my car?
Not all states require a Bill of Sale, but that does not mean that it is not a good idea to have one on hand. It is always a good idea to create a bill of sale when you sell something as significant and as valuable as a car to prevent any issue and make sure that both parties agree on any terms and are happy with the transaction.
When do I deliver the Bill of Sale to the purchaser?
The buyer’s bill of sale should not be given until the car has been paid for in full. Generally, the bill of sale is delivered when the car is physically transferred from one person to another or when the car is paid for and the transaction is completed.
When would I need to use a Promissory Note with a Bill of Sale?
Promissory notes are only needed when payments are going to be made and when you have agreed to take payments on the car or the entire amount rather than require the total amount to be paid at the time of sale.
Does the buyer need to sign the Bill of Sale?
The buyer needs to sign the Bill of Sale to prove that they agree with the terms and that they are happy with the sale and the terms agreed upon. In addition, both parties need to sign to prove that both parties agree with the sale.
Can a title be obtained with a Bill of Sale?
To get a new title when a vehicle has changed hands, you can use a bill of sale to do so. This helps prove that you have a right to change the title and own the car to get a new title.