Bill of Sale

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Bill of Sale

A Brief Introduction About Bill of Sale

A bill of sale is a legal document that mentions in writing the sale of an item or transfer of a property from one person to another. This document serves as evidence that the transaction between the two parties is legal and that the seller has indeed transferred the right of ownership to the buyer as highlighted.

Also known as a purchase and sale document, bill of sale is used for selling tangible and movable items and goods. Hence, when one sells a car, furniture, art, equipment and animals, this document will be necessary. The seller can use this document to demonstrate ownership in court and the court will accept it as a legal document. It can also be used when filing taxes, for getting insurance as well as for accounting purposes.

Before the advent of contract law and record-keeping systems, a bill of sale was used to transfer personal property from one person to another. This document did not fall under any section of the common law prevailing in the US. Hence, people often used this document to perpetrate fraud. But that has changed now as in the modern times. This is used to show that the owner voluntarily transferred ownership of and right to their property to the buyer.

Who Takes the Bill of Sale?

A bill of sale is between two individuals – the owner (seller) and the buyer of the personal property. Transfer of ownership need not be through physical transfer of the item. In many cases, titular ownership can be passed through signing this document. That means, this document can be executed even when the seller does not physically possess the commodity. The same can be said for when the buyer does not physically take possession of the commodity. This is proof enough of titular change as long as it is in good faith.

Purpose of the Bill of Sale – Why Do You Need It?

The main purpose is to provide proof that transfer of ownership has taken place. While most people use this document to transfer titles of cars, art, and boats, it can be used for transferring ownership of just about any property.

As long as the document conforms to the legal requirements of a state, it is considered valid by courts. It also allows customization of the document to suit the needs of the buyer or the seller. For instance, in an automobile bill of sale, the names of the seller and buyer, the VIN, description of the automobile and the odometer details will be mentioned.

Specifics pertaining to the type of bill of sale need to be mentioned. For that purpose, there is no one generic form of bill of sale. It depends on the commodity being transfered.

Contents of the Bill of Sale – Inclusions

Whether you are making a generic bill of sale or a specific one, you should know how to write this and what to include in it. A standard bill of sale template contains the following terms

  • Name and address of the seller
  • Name and address of the buyer
  • Name of the witness who was present when the transaction took place
  • Details of the item for which titular change is happened
  • Whether the transfer is commercial or as a gift
  • Whether the transfer is a one-time activity or part of a series of sales
  • The amount for which the item is being sold
  • Acknowledgement of
    1. Ownership of the commodity by the seller
    2. Sale of the commodity in good faith to the buyer
    3. The right to quiet enjoyment of the commodity after purchase
    4. The freedom from encumbrance or any other lien on the product
    5. Freedom from any third party claims
    6. Freedom from dispute of ownership
    7. Possession of the commodity in as-is condition
    8. That no future claims regarding warranty of the product as misrepresented may be raised
  • Waiver of liability on part of the buyer against the product in the future
  • Successors and assigns to the agreement
  • Representations and warranties of the seller and the buyer
  • Responsibility for payment of statutory costs related to the transfer of title
  • The amount that the buyer paid the seller to acquire the item
  • The date when the transaction took place between the two parties
  • Dispute resolution methods
  • Severability of the contract
  • Events that constitute performance of the agreement
  • Any other pertinent information related to the change of ownership

How to Draft a Bill of Sale?

If the sale involves a vehicle, you will want to know how to write a bill of sale for a car. You are right to worry about this, as the document showing the transfer of a vehicle is slightly different from other tangible items. It includes more details about the automobile. You can use an automobile bill of sale template to get it right the first time around.

However, some things that need to be kept in mind when drafting are

  • Whether the seller has title to the item
  • Whether the product is free from any encumbrance and claims of third parties
  • The money amount for which the item is being sold
  • That the consideration is fair exchange and in accordance with the market value for the price being paid
  • Whether the item has share title or is owned by the seller himself
  • Who has the responsibility to pay the costs for statutory compliance
  • That the buyer waives any future claim against the seller for the condition of the product described at the time of sale
  • Whether the item is being sold or is being gifted
  • The document should mention the date it was created along with the name of the county and state
  • It should highlight the names and addresses of both the buyer and seller
  • You can also use this document for a trade-in, where a buyer offers an item to the seller as an equal exchange or for a discount for an item that the seller possesses

Negotiation can be tough for a buyer as they agree to buy the personal property of the seller in its current condition. So, here, the seller has the upper hand and will not budge from the asking price. Negotiations will typically center around the price of the product and the incidental costs that would be incurred in transferring the title

Benefits and Drawbacks of Bill of Sale


  • It is a quick and easy way to complete a sale transaction of tangible goods and items
  • It can be used for a real estate property sale that does not involve an agency
  • It is a legally acceptable document to prove ownership
  • A general bill of sale PDF can be customized based on the needs of the buyer and seller
  • It enables the seller to sell the item without any hassle and the buyer to purchase what they want


  • It can be used solely for tangible and movable property
  • A buyer can file for a claim if the document mentions that they are buying the item in an as-is condition
  • In some states in the US, it is necessary to notarize the document for it to be considered legal and valid
  • All states in the US do not accept the document as legal evidence of proof of ownership

What Happens in Case of Violation?

this is more similar to a receipt rather than a signed contract. Nonetheless, it has to conform to the regulations in the state when you want to use it for official purposes. If the document meets the norms and you violate it, like not transferring ownership(1) after signing or filing a claim, you could be taken to court.

If either party sues for breaching the document, it could prove to be an expensive endeavor, with the losing party having to compensate the other for legal fees and any other fine that the court deems fit to impose.

This is used for transferring ownership of particular items. Usually, these items are of high value, but you can also use this document to transfer ownership of cars, boats, animals, and real estate property. It is a legally binding document and is issued when the buyer gains possession of the item.