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A bill of sale is a legal document that is used to transfer ownership of an item from a seller to a buyer.

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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 contains all pertinent information regarding the sale, including contact information for the buyer and seller, warranty information (if applicable), date, time, the price paid, and other pertinent information of the transaction. Day-to-day bills of sales come in many forms and 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.

Bill of Sale vs Title Transfer

It’s important to note that a bill of sale does not prove ownership. Its purpose is only to record a transaction between two parties. A title transfer, however, proves ownership by transferring the title of the item (car, house, boat etc.) to its new owner by officially notifying the governing state that the item has been sold to a new owner.

Who Needs a Bill of Sale? 

Anyone who purchases an item that may later require proof of purchase should use a bill of sale. It is extremely important that anyone purchasing or selling a car privately, rather than at a dealer, should use a bill of sale. It is not unheard of that some unfortunate victims of fraud have purchased stolen cars. In a situation like this, a bill of sale is vital. Additionally, those who purchase a motorcycle, boat, trailer or any other form of personal property should also use a bill of sale. Bills of sales provide substantial benefits for both buyers and sellers:

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

Components of a Bill of Sale

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 good 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 various parts of such a document. After all, this is a legally binding document that could cause many problems if the essential parts aren't all there. Let's take a look at some of the components that you should expect to see in a bill of sale template.

  1. 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 email addresses, that's even better.
  2. 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 its 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.
  3. 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:

  • 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, zip code 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 purchase price the buyer will pay for the property in question. Typically subtotals are not itemized on a bill of sale, only the total price.
  • The 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. If you are buying or selling a motor vehicle, be sure to include the VIN (Vehicle Identification Number), license plate number and odometer reading.
  • 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.

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.

The Ultimate Guide to Selling Your Car

Updated May 21, 2018

Planning to sell your car? Confused about how to do so? Want to make sure you get maximum value in your sale? Follow our step-by-step guide to help make sure you get the highest price possible, ensure you complete the process properly when selling your vehicle.

Step 1: Determine the Value of Your Car

  • The first step in selling your car is to figure out how much your car is worth. There are many online resources that can easily help you do so, like this one: https://www.autotrader.com/car-values/
    • Sites like this will most likely ask you general information about your car, including your zip code, make, model, year, body style, as well as actual mileage and the vehicle's condition.
  • Once you have a sense of what your car is worth, you’re ready to move on to Step 2. If your car is worth less than you’d hoped for, consider trading it into a car dealership. You may be able to get more value for your car if offloading it is part of the purchase of a new or used vehicle.

Step 2: Gather the Appropriate Documentation

Note: Each state has its own laws regarding auto sales. Be sure to familiarize yourself with your state’s laws. You can find necessary information on your state's Department of Motor Vehicles website. That being said, vehicle sales in virtually all states will require the following documents:

  • Title: Upon completion of the sale, you will sign the vehicle’s title over to the new owner. If the title is held by a bank, be sure to have the bank to sign over the title once the sale is complete.
    • If applicable, list of any advertisements for the vehicle that the car has an outstanding balance. The process of transferring the title for a bank-owned car can be more complex. Transparency with any prospective buyer, therefore, will help the sale go smoothly.
    • Pro tip: Do any and all paperwork regarding the transfer of title at the bank that holds the title. You can also hire an escrow service to hold the title and manage the transferring of funds and title between you and your buyer. Escrow services generally charge a commission or a fee for their services, however, do not be put off by this extra expense. The extra protection is often worth the extra price.
  • Maintenance Records: You should have records and receipts documenting all of the maintenance and repairs done on the vehicle. Assuming you've properly maintained the vehicle, these records can help you sell the car for the highest possible price because they provide written proof that the car has been properly taken care of.
    • If you don’t have maintenance records, you should be able to get copies of the documents from the dealer or mechanic(s) that you’ve used for service.
  • Bill of sale: This documents the terms and conditions of the sale and can release you from certain liabilities related to the transaction.
  • Release of liability: This protects you from financial liability for any damages or car-related issues incurred after the sale of the vehicle. 
  • Warranty or “as is” documents: If the car is still under warranty, be sure to include all documents pertaining to the warranty coverage. If the car has no warranty, be sure to include language in the contract that makes it clear that the buyer will assume all responsibility for repairs and damages.

Step 3: Prepare the Car

In order to sell any car, it should be:

  • Thoroughly clean and presentable for photographs. A cleaner car is a more attractive one to buyers, especially if you are listing it online. Cleaning the car should include:
    • Washing and waxing the exterior
    • Washing floor mats
    • Cleaning tires and rims
    • Cleaning ashtrays and any other car compartments
    • Washing windows
  • Up to date on maintenance. Change any old fluids, rotate tires, etc. Be sure to save receipts for all services to show potential buyers. If the car needs new tires or other “wear and tear” services you can either have the work done ahead of time in hopes of a higher sale price or inform potential buyers of the needed repairs before agreeing to a sale.
  • Photographed. Take pictures, lots of pictures. You should have multiple shots from different angles of the exterior, interior, wheels, and engine. Even if you end up not including all photos in advertisements, it is a good idea to have extra photos to show potential buyers upon request.

Step 4: Advertising Your Car

Make a game plan regarding where you want to advertise your vehicle. Advertisements to consider include websites, flyers, newspapers, social networks, word of mouth, and for sale signs in the car’s window.

Any for sale sign should include your phone number and the vehicle’s asking price. Reputable internet sites include: eBay Motors, Cars.com, Autotrader.com, Kelley blue book, or Craigslist -- see our Craigslist Guide at the end of this guide for tips on protecting yourself from fraud should you choose this method of selling.

Advertisements for the vehicle, in any venue, should include the following:

  • Description of the seller and reason for selling
  • Seller profile picture (optional)
  • Asking price--be sure to also indicate if the price is firm or if you are willing to negotiate (i.e. “or best offer”)
  • Actual mileage
  • The condition of the vehicle
  • Vehicle history (accidents, damage, etc.)
  • Modifications, upgrades, or repairs, if applicable
  • VIN number--this helps potential buyers order a vehicle history report if desired.
  • Number of owners
  • Photographs

Step 5: Interacting with Potential Buyers

In general, buying and selling a car on your own is a safe process. However, it is best to err on the side of caution when dealing with strangers. Therefore, we recommend the following guidelines for interacting with potential buyers:

  • Answer questions from interested parties by email or phone
  • Only set up test drives with serious buyers
  • Look out for fraud
  • Require any interested buyer’s full name
  • Clearly identify which forms of payment you will accept checks and money orders come with more risk than cash, PayPal, etc.
  • Determine if potential buyers live in your area. This makes payment and arranging for test drives easier

Tips for Arranging Test-Drives:

  • Pick a safe, central location in a public place during the day
  • Ask to see potential buyer’s license
  • Accompany interested buyers on the test drive
  • Consider asking a friend or family member to attend as well, if possible

Step 6: Negotiating the Sale

Assuming you are willing to negotiate the price, here are some tips for negotiating the highest price:

  • Don’t be afraid to make a counteroffer in response to the buyer’s initial offer
  • Decide beforehand the lowest price you are willing to accept and stick to it
  • Consider negotiating a price before meeting at the seller’s bank or credit union to finalize the sale

Step 7: Finalizing the Sale

Here are some things to remember as you finalize the deal. If you agree to accept a cashier's check, be sure to accompany the buyer to their bank to get your money. After receiving payment, make sure to do the following:

  • Complete the bill of sale
  • Sign over the title
  • Get a release of liability signed and submit to DMV (if required)
  • Provide maintenance record copies (be sure to black out personal info)
  • Include any additional paperwork required by your state
  • Hand over keys and copies

Key Terms

What Does "as-is" Mean in a Bill of Sale? 

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.

Conclusion

A bill of sale is an important legal document that accurately documents the transaction between two parties in the sale of personal property. By now, you should have a clear understanding of the benefits a bill of sale serves for both the buyer and the seller. Though it serves as an important legal document, free templates can be found throughout the internet, saving you both time and money.

More Resources

The Best and Worst States to Buy a Used Car

May 3, 2018

Methodology

Our team at FormSwift wanted to determine the best and worst states to buy a used car. To do so, we evenly weighted the following factors into a final score out of a 100 point baseline for each state, which represented how much an individual would pay in associated fees - monthly car insurance rates, average gas prices, and dealer documentation fees. States with lower totals ranked better than states with higher totals. The datagraphic below shows states from best to worst.

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