Bill of Sale

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Bill of Sale: Everything You Need to Know

What is a Bill of Sale?

A bill of sale, proof of purchase, proof of payment, As Is Bill of Sale, Proof of Sale, Sales Slip, or Sales Receipt, is a document or receipt used to transfer the ownership of an object such as a vehicle. This document becomes important when you need to buy or sell personal property. You may associate bills of sale with used vehicles, but you can use this document for a variety of items.

A bill of sale will detail a transfer of property or sale of items between a seller and buyer. This type of document serves as legal evidence that the seller transferred his or her rights to the assets described in the bill of sale.

A bill of sale must include key information such as the following:

  • Names of the buyer and seller.
  • Contact details.
  • A description of the item(s) being sold.
  • The price of the item(s).
  • Methods of payment.
  • Warranty details.

You'll typically see a bill of sale used to record the sale of automobiles, motorcycles, watercrafts, or other objects associated with transportation. You can also use a bill of sale to record the transfer of personal property, such as purchasing or selling a used car. A bill of sale is also useful for transfer of other personal property such as a bicycle, furniture, a laptop, or an animal such as a horse or other livestock.

This legal document records a transfer of ownership of an asset from one party to another. As a rule, the seller will draft the document. A bill of sale should include all details of the transaction as a way to protect both parties if a disagreement about the condition of the item or terms of the sale occurs. Since a bill of sale will include details about the condition of the item sold and any warranties, as well as terms of payment, this document acts as legal proof of the agreement.

When should I use a Bill of Sale?

You should use a bill of sale for the following circumstances:

  • You own property you would like to sell and need to have a record of the purchase detail for accounting records. Examples of property include a motor vehicle (such as a car) or other personal property, but not real estate.
  • You plan to purchase a motor vehicle or other property from a private seller, and you want to record the proof of purchase and the details of your agreement in writing.
  • A proof of purchase is required. Many states will require a signed bill of sale in cases when you are transferring a title with a state's department of motor vehicles (DMV) or buying and selling branded livestock.

Some transactions involve an exchange of property but do not require a bill of sale, including the following:

  • Real estate. You can't use a bill of sale to transfer real estate between owners because real estate transactions are more complicated than the types of transactions listed above. You will need additional forms from your state or local government, or a quit claim deed (a legal instrument used to transfer interest in real property) when you're dealing with a real estate transaction.
  • Performance of services. A bill of sale transfers ownership, not services. If you're providing or obtaining a service such as business consulting or babysitting, you should instead use a general contract for these services. If you own a business that receives payment for selling products, a general receipt is sufficient.
  • Small-scale sales. Although deciding whether you want a bill of sale for inexpensive property is a matter of personal preference, many people don't feel that creating a bill of sale for less expensive items is necessary. A bill of sale is not required for small-scale sales.

If you're not certain whether you need a bill of sale, you should consult an attorney. An attorney can help ensure you're using the correct document and are including all information that you need for your transaction.

Transferring Ownership of a Vehicle With a Bill of Sale

You must understand the intricacies of the bill of sale with motor vehicles if you plan to buy or sell an automobile. An automobile bill of sale represents that the right to ownership of the vehicle has been transferred. However, the vehicle's certificate of title represents the actual ownership. Every state requires this certificate of title, a document that records official proof of ownership of a vehicle.

If you are the purchaser of a vehicle, you can apply for a title in your name at your state's DMV when you have the signed bill of sale and pay a title transfer fee. In some states, the DMV requires a bill of sale signed by both the seller and the buyer. Some states require a notarized bill of sale as well.

Sales Contract vs. Bill of Sale

Make sure you understand the differences between a sale contract and a bill of sale when deciding which document you need.

A sale contract:

  • Is executed between a buyer and seller.
  • Details the terms for a buyer to agree to purchase an item and a seller to agree to sell it.
  • Records the future sale of an item. A sale contract is used before an exchange of an item occurs.

A bill of sale:

  • Transfers ownership.
  • Provides details of the exact item a buyer will receive.
  • Promises that the person selling the items has a valid title to the item as well as the right to transfer the title.
  • May include warranties about the item sold and its future performance, or show that the item was sold "as is" and disclaim all warranties.
  • Used during or after a product exchange.

How Can I Write a Bill of Sale?

Some county tax assessor-collector's offices or local DMVs provide bill of sale forms that you can use. Some sellers also choose to create their own bill of sale. Since requirements vary by state, check your state's requirements to make certain your document complies with them. In some states, only the buyer needs to sign the bill of sale. Other states will require both the seller and buyer to sign. Requirements for notarization also vary among states.

Include the following essential pieces of information:

Basic Data
  • Name and address of the seller.
  • Name and address of the buyer.
  • Date of transaction.
  • Previous owner(s) (in other words, if someone first sold the item to the seller, this fact should be included).
Description of the Item
  • Identification number.
  • Serial number.
  • Make.
  • Model.
  • Design.
  • Size.
  • Color.
  • Any special marks or features.
  • Any faults of the item.
  • Special conditions to the sale (for example, if the item is sold as is or with warranty).
Additional information needed for vehicle sales
  • VIN, or vehicle identification number.
  • License plate number.
Payment Information
  • Amount paid (write out in words and in numbers).
  • Method of payment.
  • Did the buyer pay in installments or in full?
  • Did the buyer pay with cash, credit card, bank deposit, or check?
  • Agreements (if applicable) concerning
  • Deadlines for pending payments.
  • Terms for late payments.
  • Interest rates.

Before completing the transaction, make sure the bill of sale is completely legible and verify that all information and signatures are accurate. Finally, make copies of the document for both the buyer and the seller.

Protect yourself as either a buyer or seller with a carefully constructed bill of sale the next time you enter into a legal transaction.

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Bill of Sale Templates

Purchase and download fillable PDF templates that match your Bill of Sale needs.
Bill of Sale for Boat

Used to document the transfer of ownership for a boat.

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Bill of Sale for Car

Used to document the transfer of ownership for a car.

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Bill of Sale for Furniture

Used to document the transfer of ownership for furniture.

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Bill of Sale for Phone

Used to document the transfer of ownership for a phone.

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Bill of Sale for Goods

Used to document the transfer of ownership for general goods.

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Bill of Sale for Pet

Used to document the transfer of ownership for a pet.

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