Bill of Sale

What is a bill of sale?

A bill of sale is a legal document that records the transfer of ownership of an item, asset, or property from a seller to a buyer in exchange for money or value. Generally, a bill of sale includes key details such as the parties involved, a description of the property, and the terms of the transaction, serving as formal proof of transfer. It serves as proof of purchase and provides crucial details about the transaction. Bills of sale are most commonly used when selling or purchasing valuable property such as vehicles, boats, aircraft, or even high-value personal property, but can be used for a wide range of other items as well. 

When to use a bill of sale

A bill of sale should be used whenever transferring ownership of valuable property or assets, especially when state laws, insurance companies, or registration authorities require proof of sale. The most common of these situations are:

• Selling or buying vehicles, including cars, motorcycles, boats, and aircraft, where most states mandate a bill of sale for registration or title transfer.

• Transferring livestock or branded animals, as certain states require bills of sale to document ownership for health and branding purposes.

• Sale of personal property with notable value, such as equipment, furniture, artwork, and collectibles, especially when either party wants formal proof of the transaction.

• Transactions involving real estate (often paired with other legal documents like deeds).

• Documenting security interests in financed purchases (as with collateral for a loan).

• Whenever state regulations or the requirements of a specific jurisdiction specifically require it, such as recording odometer readings for vehicles or notarization for watercraft sales in some states.

Depending on the jurisdiction, an official bill of sale may need to be submitted to the appropriate authorities to ensure that the transfer is legally recognized.

Bill of sale help guide

Your bill of sale will serve to memorialize the important details of your transaction and acts as a receipt for the buyer. It is an essential tool for proving the terms of the agreement down the road, and many states require the use of a bill of sale when transferring automobiles, aircraft, watercraft, and similar items. Described bellow are the essential elements of a legally compliant bill of sale.

Property Type

To complete your bill of sale, start by specifying what kind of property is being sold. You will need to use multiple bills of sale if you want to transfer multiple types of property. When describing the property, include as many identifying details about the property as possible. It is also important to clearly state the item's condition in the bill of sale to ensure transparency and help prevent future disputes.

Buyer and Seller Information

Next you will need to add the names and addresses of the buyer and seller. If the buyer and/or seller is acting under a business entity, then use their respective business addresses here.

Cost and Other Terms of the Deal

You will then need to add any other important terms of the transaction, such as the price and whether there are any encumbrances on the property being sold. An “encumbrance” is a lien, loan, or other restriction on an owner’s title. Common examples include collateral for a loan, mechanic’s liens, legal judgments, tax liens, and other government liens. You should also specify the payment method, such as cash, which is often used for high-value transactions and can affect how ownership is transferred in the bill of sale. Additionally, the bill of sale may include a clause stating that the buyer accepts the item in its current 'as-is' condition, acknowledging and agreeing to the sale terms without warranties.

Witnessing Your Document

Many states require a notary public to witness both parties signing the document. However, it is recommended that you use a notary to witness the document regardless of the state you are in. This will help prove the authenticity of the document if there is ever a dispute in the future. If the buyer and seller are in different locations and want to have the document notarized, they will each need to get it notarized separately. Your bill of sale will be considered fully executed once it is completed, signed, and notarized (if included). Then make sure that both parties get a copy of the fully executed agreement.