A bill of sale is a legal 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 the rights to the property which was detailed in the bill of sale to the buyer.
Depending on the type of transaction, a bill of sale can be quite complex or quite simple. For assets which are worth a lot of money, it is important that a bill of sale be completed properly and obtained at the time of sale.
A bill of sale is typically drafted by a seller and it includes the details of the transaction and it protects both parties if there are any disagreements in the future. Even a buyer can bring a bill of sale in case the seller does not have one.
When Should a Bill of Sale Be Used?
A bill of sale is commonly used when selling or buying items which have significant value such as aircraft, automobiles, motorcycles and watercraft. Most states require a bill of sale when buying or selling vehicles or animals such as horses, so that there is proof of purchase.
For items which have less value such as clothing, it is up to the individual to decide whether they want to take the time and draft a bill of sale.
What Does a Bill of Sale Include?
When drafting a bill of sale, it is important to comply with your state’s requirements and these requirements can vary by state.
For example, in some 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. However, a generic bill of sale usually includes the following information:
- The date of purchase;
- The name and address of 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; and
- A guarantee that the item is free from all claims.
What are the Different Types of Bills of Sale?
Here are some of the major types of bills of sale:
- Absolute Bill of Sale: This is a document which simply represents the sale or transfer of goods and this document does not represent any type of security for a loan and it does not include any other condition.
- Conditional Bill of Sale: This document represents the assignment or transfer of personal property as a type of security to a creditor who is lending money to a debtor. 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: This is a document which is used when the seller cannot guarantee that they own the property and have the right to transfer it or when the seller does not want to warrant title. Because real estate transactions are complex, you should not use a quitclaim bill of sale when dealing with real estate.
- Bill of Sale with Warranty: This is a document in which the seller can guarantee that they own the property and have the right to transfer it and it will protect the buyer from claims in the future against the property.
- Vehicle Bill of Sale: This is not required in all states. Some states require that you use a bill of sale provided by the DMV while some let you draft your own as long as it complies with the local requirements.
- A bill of sale is a document which records that a sales transaction occurred between two parties. It is important to remember that a bill of sale does not prove ownership and only a title transfer proves ownership. In order for the vehicle title transfer 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?
A bill of sale is important for items which have significant value and the requirements for this document can vary depending on the state and the type of transaction. In this context, it may be useful to consult with a local business attorney before proceeding.