Bill of Sale Laws

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 What is a Bill of Sale?

A bill of sale is a legally binding document that shows in writing the sale or transfer of personal property from one party to another. A bill of sale shows that full consideration has been provided in a transaction and that the seller has transferred all the rights to the property which was detailed in the bill of sale to the buyer.

Depending on the type of transaction being sold in the bill of sale, the complexity of the bill of sale can vary. Some transactions include expensive assets or may have sentimental value. To ensure transactions of this magnitude are properly executed, it is important that a bill of sale be completed properly and obtained at the time of sale.

A bill of sale is usually drafted by a seller and it includes the various details of the transaction. A bill of sale can also protect both parties if there are any disagreements in the near future. Furthermore, if one party forgets to bring a bill of sale to the transaction the other party even if it’s the buyer can provide one.

When Should a Bill of Sale Be Used?

The ultimate purpose of the bill of sale is to help selling or buying items which have significant value such as aircraft, automobiles, motorcycles, trailers, and watercrafts. The bill of sale is also important to the majority of states that require a bill of sale when buying or selling vehicles or animals so that there is proof of purchase. For items which have less value such as clothing, it is often up to the individual to decide whether they want to take the time and draft a bill of sale.

Is a Bill of Sale a Binding Contract?

Because a bill of sale is a legally binding document, when drafting a bill of sale, it is very important to comply with your state’s requirements and these requirements can vary by state. For example, in many states only the buyer is required to sign the document while other states require both parties to sign the document and some may even require that the form be notarized.

Moreover, a generic bill of sale usually includes the following information:

  • The date of purchase
  • The name and address of both the seller and the buyer
  • The signatures of the seller and the buyer
  • The description of the property being transferred
  • The amount paid for the transfer of ownership
  • Any representations or warranties
  • A guarantee that the item in question is free from all claims
  • Signatures of the buyer and seller

If the bill of sale is for a vehicle it must also include the following:

  • Vehicle make, model, and year
  • Mileage on the odometer
  • Description of the motor vehicle
  • Vehicle identification number or serial number
  • Hull number for boats only

Can a Bill of Sale Be Handwritten?

A bill of sale is a legal document that verifies you have sold your car and provides basic information about the vehicle or any other item and the terms of the sale. It is important to make sure all the requirements for the respected state law are included in the bill of sale. As, with any legal written document a bill of sale can be handwritten. A bill of sale can be handwritten as long as it includes the information listed above.

What States Require the Bill of Sale to Be Notarized?

As stated above, a bill of sale is a legal document that transfers the ownership of an asset to a second party in exchange for value. A bill of sale is drafted by the seller and can be used for any type of property. Most states do not require a notary to witness the signing of a bill of sale. Moreover, 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.

How to Write a Bill of Sale?

Anyone can write a bill of sale as long as it has certain requirements. When writing a bill of sale, the bill of sale must contain information in order for it to be legally binding. This information is important as it will better explain how much sales tax you may pay. When writing a bill of sale, make sure it contains: the seller’s name and address, the buyer’s name and address, a description of the item being sold and if it’s for a vehicle make sure to include, the vehicle identification number, the date of transaction, the previous owner, the amount paid, the method of payment and finally, any agreements regarding due dates for pending payments. This information is also listed above in the previous section.

Finally it is a good idea and recommended to re-read and double check your bill of sale to ensure all the information is correct and there are no other mistakes. You also should consider contacting a business lawyer if you have any other questions.

What are the Different Types of Bills of Sale?

Every state has different guidelines for a bill of sale. How long a bill of sale is valid for varies depending on the state guidelines.

Listed below are some of the most common types of bills of sale:

  • Absolute Bill of Sale: The absolute bill of sale is a document which represents the sale or transfer of goods. The absolute bill of sale does not represent any security in the title.
  • Conditional Bill of Sale: The conditional bill of sale is an assignment or transfer of personal property as a type of security to a creditor who is lending money to a debtor. Furthermore, if the debtor is not able to pay back the loan, then the creditor has the right to take the personal property.
  • Quitclaim Bill of Sale: The quitclaim bill of sale is used when the seller fails to guarantee that they own the property or when the seller does not want to warrant title.
  • Bill of Sale with Warranty: The bill of sale with warranty is a document in which the seller can guarantee that they own the property and furthermore have the right to transfer it.
  • Vehicle Bill of Sale: The vehicle bill of sale is not required in all states. Moreover, some states require that you use a bill of sale provided by the DMV in your state while some let you draft your own as long as it complies with the local requirements.
    • It should also be noted that a bill of sale is a document which records that a sales transaction occurred between two parties. Also remember that a bill of sale does not prove ownership and only a title transfer proves ownership. In order for the vehicle title to be transferred and paperwork to be completed, the DMV in your state may require that you bring a completed bill of sale with you.

Should I Contact a Lawyer?

If you are considering writing a bill of sale, and have questions about writing your bill of sale you should consider discussing your options with an experienced commercial lawyers. While it is possible to represent yourself “pro se” the majority of people who are interested in learning more about writing a bill of sale do so with the advice of an attorney. There are several different types of bill of sales and rules that go along with each one. Therefore having a knowledgeable business attorney will be an invaluable resource. Finally, a business lawyer can give you additional details on writing a bill of sale.


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