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Bill of sale: What Is It?

A bill of sale is a legal document that is used to transfer ownership of an item from a seller to a buyer. It includes relevant information such as contact information, descriptions of the items, payment methods, and warranties.

The bill of sale proves the owner of a given item. This can be used in a court of law to demonstrate ownership for items such as vehicles, boats, motorcycles, and many more items.

Bill of sale benefits

A legally binding bill of sale makes the lives of both buyers and sellers substantially easier.

Benefits for sellers:
  • Ease of tax reporting
  • "As-is" protection
  • Date of ownership transfer
Benefits for buyers:
  • Proof of ownership
  • Date of ownership transfer
  • Warranty information

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What Is A Bill of Sale?

A bill of sale is a document used in the transfer of an item's ownership from the person selling it (the Seller) to the person purchasing it (the Buyer). It is a legally binding document, often used in a court of law as proof of an item's ownership.  It contains all pertinent information regarding the sale, including contact information for Buyer and Seller, warranty information (if applicable), and the date that ownership is transferred. Day-to-day Bills of Sales comes in many forms; a bill of sale can be as minor as a receipt for a pack of gum or as major as a record of a large, and expensive purchase, such a boat or a car.

From a legal perspective, a free bill of sale form makes the lives of both buyer and seller. To make your life easier still, FormSwift has devised a bill of sale template that lets you draw up a free bill of sale form in just a few minutes. Below we have outlined the major components of a bill of sale form.

  • Property Location - This section of the bill of sale form specifies the location of the item being sold. Typically this includes only general location information: city, county, state, etc. Our bill of sale template also includes a brief description of the item being sold.
  • Seller(s) - This section includes the main seller's contact information, including his or her full name and address. It is also where any additional sellers are noted.
  • Buyer(s) - This section provides the contact information of the buyer. It also lists information about any additional buyers.
  • Price - This lists the total price the buyer will pay for the property in question. Typically subtotals are not itemized on a bill of sale.
  • Form of Payment - This specifies what payment method the buyer will use. Options include cash, personal check, certified check, money order, etc.
  • Sales Tax - This section specifies how sales tax will affect the price. It is either included in the prices or added to the price.
  • Property - This includes the date of property transfer. It also specifies whether the item is being sold "as is" or under warranty. If the item is being sold "as is," the bill of sale states that the buyer has had the opportunity to inspect and approve the item's condition.
  • Witness Information - This section is only pertinent if a witness will be present to sign the bill of sale. It includes the witness' full name, address and other contact information. The witness can either be a public notary or a party agreed upon by the Buyer and Seller.

Legal Considerations of a Bill of Sale Form

In the world of legal documents, the bill of sale resides somewhere between a simple cash register receipt and a formalized title or deed.  The bill of sale represents a record that a seller has sold an item of possession to a buyer.  This legal document is usually drafted by the seller, and it signifies a record of the sale.  The bill of sale form will include the details of the transaction, and although it will typically be signed by the seller, it is not have the legal force of a title or deed.  Bills of sale do not prove ownership; rather, they only show that a transfer of ownership occurred.  Nonetheless, the bill of sale can prove useful as evidence that the transaction did indeed take place.  It can also be helpful if there is a dispute as to the details or conditions of the transaction.  From the buyer's point of view, a bill of sale is a good way to get the specifics of a sale in writing before a monetary exchange is made.  For the seller's perspective, a bill of sale can be helpful in maintaining records for accounting purposes.

While it is true that a bill of sale form is a fairly simple document compared to other legal documents, it still has legal force and should be taken seriously.  As with any legal document, it is never a good idea to sign it without reading and understanding all parts of the document, including the fine print.  This is especially true for the buyer, as it is usually the seller who has composed the bill of sale (or hired someone else to compose it).  Therefore, while both the buyer and the seller must consider the terms of the sale very carefully, it is especially important for the buyer to understand the legal considerations of the bill of sale.

One thing to know is that a bill of sale template acts much like a contract, meaning that if written and executed properly, it is legally binding to all signers of the document.  For that reason, it is imperative that buyers and sellers not only read the bill of sale form carefully, but also ascertain that all of the information is accurate and complete.  Inaccurate information, such as an overstated sale price or a misrepresentation of the property being sold, can cause legal difficulties; incomplete information can cause problems too, which is why a properly drafted bill of sale form should include as much information as possible about the item(s) being sold and the terms of the sale.

It is also important to realize that the seller must have full rights to sell the property listed on the bill of sale form; otherwise, there could be serious legal repercussions for the seller.  Hence, it is advisable for the buyer to request that the seller produce documentation showing that he or she has full ownership rights to the item(s) being sold.  If this documentation cannot be produced upon request, the buyer should be hesitant to sign a bill of sale.

To better understand the legal aspects surrounding a bill of sale, it is instructive to go online and search for a sample bill of sale.  Search engines such as Google, Bing, and Yahoo are quite helpful and will yield an array of samples; look at the legal language used in these forms and take note of their common terms and elements.  You can even add the word "free" to your search for a sample bill of sale, as that will enable you to search for a free bill of sale form.  You might be pleasantly surprised to discover that there are free bill of sale forms available online, but be sure to verify the quality of any legal form if you actually intend to use it.

Using a bill of sale form is an excellent way to protect the legal rights of buyers and sellers.  Understanding the legal issues pertaining to bills of sale is an essential step in keeping all parties satisfied with the transaction.


What Are the Parts of a Bill of Sale Template?

When buying or selling property, a bill of sale template is a great way to certify that the transaction is being made.  It is also a means of legally documenting the details of the transfer of property, as it will typically contain extensive information on the transferred item(s) along with the contact information of the buyer and seller.  Furthermore, a bill of sale is a relatively simple form that could even be found through an Internet search engine.  You do not need to be an attorney to create a bill of sale, and if you can locate a free bill of sale template online, you might spare yourself the expense of hiring an attorney or legal expert.

On the other hand, it is not a smart idea to choose a free bill of sale template at random.  If you're going to create a bill of sale, you should at least be familiar with the parts of such a document.  After all, this is a legally binding document that could cause a great deal of problems if the essential parts aren't all there.  So, let's take a look at some of the parts that you should expect to see in a bill of sale template.

For one thing, if all of the basics aren't there, then you don't have a usable bill of sale template.  Even if it's free of charge, avoid any template that doesn't indicate a place to write or type the names of the buyer and seller, along with their addresses and telephone numbers.  If also there's a place in the template to include e-mail addresses, that's even better.  Next, check to see if there is a section where the seller and/or buyer can indicate the details of the property that is to be transferred.  There should be sufficient room in this section to leave highly detailed information about the property and the condition it's in at the time of purchase.  Keep in mind that if more than one item is encompassed within the transaction, it may be necessary to itemize or list the particular items separately.  If this is the case in your situation, the bill of sale template that you choose should allow for this.

The next thing to remember is that your bill of sale template must specify the financial details of the transaction.  Upon viewing the form, one should easily be able to tell how much the property was sold for and when it was sold.  If there is sales tax involved, this should be noted as well; moreover, the method of payment (such as cash) should be clearly indicated in the template.  Any bill of sale template, free or otherwise, ought to include these elements.

bill of sale template

Don't be surprised if a bill of sale template includes an "as is" clause.  This clause will stipulate that the transferred property has been inspected by the purchaser and that the seller disclaims any warranty as to the condition of the property.  Thus, the free bill of sale form will affirm that the purchaser is knowingly buying the property in its existing condition at the point of sale.  This is perfectly normal and should not cause any alarm if it is included in a bill of sale template.

Finally, any template should have a place for at least three signatures:  the buyer(s), the seller(s), and at least one witness or notary.  The bill of sale, if written properly, will have places for printed names, signatures, and dates at the bottom of the form.  After you get to the bottom of the document, double-check it to make sure that it looks professional and is free of spelling and grammatical errors.  If your bill of sale template passes muster, you'll have a reusable legal document that can give you peace of mind anytime you're buying or selling a tangible piece of property.