Your bill of sale will serve to memorialize the important details of your transaction and acts as a receipt for the buyer. It is an essential tool for proving the terms of the agreement down the road, and many states require the use of a bill of sale when transferring automobiles, aircraft, watercraft, and similar items.
To complete your bill of sale, start by specifying what kind of property is being sold. You will need to use multiple bills of sale if you want to transfer multiple types of property. When describing the property, include as many identifying details about the property as possible.
Next you will need to add the names and addresses of the buyer and seller. If the buyer and/or seller is acting under a business entity, then use their respective business addresses here.
You will then need to add any other important terms of the transaction, such as the price and whether there are any encumbrances on the property being sold. An "encumbrance" is a lien, loan, or other restriction on an owner's title. Common examples include collateral for a loan, mechanic's liens, legal judgments, tax liens, and other government liens.
By law, a notary public must witness both parties signing the document in Louisiana, Nebraska, Maryland, New Hampshire, West Virginia, and Montana. However, it is recommended that you use a notary to witness the document regardless of the state you are in. This will help prove the authenticity of the document if there is ever a dispute in the future. If the buyer and seller are in different locations and want to have the document notarized, they will each need to get it notarized separately. Your bill of sale will be considered fully executed once it is completed, signed, and notarized (if included). Then make sure that both parties get a copy of the fully executed agreement.
A bill of sale is a legal document that is used to certify the transfer of legal title to a new owner. As such, it acts as a receipt for both the buyer and seller and can sometimes also be used as proof of ownership by the buyer.
In many states, a bill of sale is required to document the transfer of a motor vehicle between parties. It is also commonly used in sales of equipment, animals, watercraft, and aircraft, as well as other large, expensive, or rare items.
Buyers and sellers can use a bill of sale to memorialize any sales transaction besides the purchase of real estate. These documents are frequently used when transferring title to motor vehicles, including all types of cars, trucks, recreational vehicles, motorcycles, boats, and airplanes.
While they are common for motor vehicles, bills of sale can also be used to document sales of other types of personal property such as furniture, machinery, jewelry, animals, exercise equipment, clothing, bicycles, appliances, tools, and more.
A bill of sale is usually used by individuals or unincorporated businesses when selling tangible personal property.
Typically, a seller will create a bill of sale to prove that the item was sold and transferred on a certain date. Both the buyer and seller should keep copies of the signed bill of sale after the transaction, as proof of transfer for the seller or as proof of payment for the buyer.
A bill of sale differs from sales contracts (also known as purchase agreements and sale of goods agreements) in several meaningful ways.
Sales contracts spell out the details about sales transactions taking place in the future, including describing the item to be sold and specifying the date that ownership will transfer between the owners. They also specify payment terms and the logistical details about how shipping and delivery of the item will take place. In contrast, a bill of sale merely documents the transaction itself.
To learn more, read about the differences between a sales contract and a bill of sale.
A bill of sale should, at a minimum, include information identifying the parties to the transaction (the buyer and seller), the total purchase price, and a specific description of the item that was sold.
In the case of a motor vehicle, it is important that the bill of sale include specific identifying information such as the make, model, year, body type, and vehicle identification number (VIN number). When selling a boat or other watercraft, the bill of sale will include the hull identification number (HIL).
Bills of sale also typically include the following information:
Creating a bill of sale is quick and easy with LegalNature. Before you begin, be prepared to describe the item being sold, the parties to the transaction, and the payment details for the sales transaction.
Most states do not require a notary to witness the signing of a bill of sale. However, by law, a notary public must witness both parties signing the document in Louisiana, Nebraska, Maryland, New Hampshire, West Virginia, and Montana. Notaries are optional in other states.
Still, it is recommended that you use a notary to witness the document regardless of your state. This will help prove the authenticity of the document if there is ever a dispute in the future. If the buyer and seller are in different locations and want to have the document notarized, they will each need to have it notarized separately.
While a bill of sale can include specific warranties, it usually does not include specific assurances or promises about the item being sold. Instead, a bill of sale typically includes an "as-is" provision. This is important because it limits the seller's future liability. The "as-is" language means that there is no warranty included and that the buyer agrees to accept the item in its current condition, whether or not faults are readily apparent.
A bill of sale may also include a statement that the seller warrants that there are no liens or other encumbrances on the property being sold and that the seller actually has proper title and the legal authority to enter into the sales transaction.
A bill of sale can only be used to transfer personal property that the seller already owns and that is movable, such as motor vehicles, animals like horses or dogs, or household goods. A bill of sale cannot be used to transfer something that the seller does not own or that the seller does not have the legal right to transfer.
When selling real property (real estate), a bill of sale cannot be used. When real estate is transferred, the sale will typically be documented on a quit claim deed or a general warranty deed, although different types of deeds may be used in certain transactions.
Before completing a bill of sale it is a good idea to collect some basic information, such as the name and address of the buyer and seller, the price, and any identifying details for the property being sold. For example, if you are selling a car, you will need the make, model, year, body type, odometer, and vehicle identification number (VIN).
Next, you will use the information you gathered to create your bill of sale. LegalNature can help you by providing step-by-step guidance. Simply complete our questionnaire, which will tailor your bill of sale to your particular needs. The questions we ask change depending on your state and the answers submitted.
Be sure to thoroughly review your bill of sale before signing it to make sure that there are no mistakes and that it will serve your needs. If you need to make edits to the text of your document, you can do so by downloading it in .doc format and editing it in Microsoft Word or Google Drive. If you do not need to make edits, download your bill of sale in .pdf format. You can find these downloads in your LegalNature dashboard after completing the questionnaire.
By law, a notary public must witness both parties signing the document in Louisiana, Nebraska, Maryland, New Hampshire, West Virginia, and Montana. However, we recommend using a notary regardless of your state. Using a notary helps authenticate the document in the event of a dispute. If you use a notary, then you must wait to sign the document until the notary is present. If the parties are in different locations, they may have their signatures notarized separately. Upon having your bill of sale signed and notarized, it will be considered fully executed and legal.
Provide copies of the fully executed document to each party. It may also be a good idea to provide a copy to any third parties involved. Store your copy in a safe location. We recommend also making a digital copy as a backup.
Completing a sale of goods agreement prior to delivery of the goods will help to fully protect both buyer and seller. Use a sale of goods agreement to memorialize the key terms of a sale, including party rights, delivery details, and shipment requirements. This will help ensure that both the buyer and seller uphold their responsibilities in good faith. For example, the agreement will require that the buyer is compensated for any late delivery and quality problems with the goods. Upon delivery, the parties can sign the bill of sale to record the title transfer.