How to Write a Bill of Sale (3 Easy Steps Anyone Can Do)

A bill of sale is a document that serves as proof of a transfer of ownership. In this post, we will guide you on how to create a bill of sale.

This document can be used to record a wide range of transactions, with the most common ones being for vehicles such as cars, motorcycles, or boats. However, a bill of sale can also be used when selling personal items like clothing, furniture, or even pets.

Typically, the seller is responsible for drafting the bill of sale, which should include all the necessary details regarding the transaction. The purpose of a bill of sale is to document the sale and provide protection for both parties in case of any future disputes.

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Table of Contents

How Does a Bill of Sale Work?

You can think of a bill of sale as being similar to a receipt. It’s a legal document that gives protection to both parties by proving the sale was completed and that the property and payment changed hands.

For the seller, a bill of sale is proof that the item being transferred was accepted by the buyer in the condition described.

For example, if someone is selling their used car, they may wish to sell it in “as-is” condition. This means they aren’t extending a warranty that everything on the car works perfectly since the vehicle’s used condition could mean there is an unknown underlying problem with a component of the car.

By contrast, if they sell it with a warranty, the bill of sale should spell out what they’re guaranteeing.

For the buyer, the bill of sale is a record of the transaction. This gives them proof of ownership as well as a record of their payment. Depending on which state they live in, they might also need the bill of sale to complete the transfer of ownership. For example, some states require motorists to produce a bill of sale before they can register a vehicle in their name.

Sellers can draft a bill of sale on their own, but it’s often helpful to use a template. While there are no universal formats or rules for what a bill of sale should look like, the document should include the names of the seller and buyer, a description of the item being sold, and the date of the sale.

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Do I Need a Bill of Sale?

Each state has its own rules for bills of sale and when they’re required. If you’re selling a vehicle, you should check your state’s laws as most states require a bill of sale.

If you’re selling something of minimal value, such as items at a garage sale, you probably don’t need to bother with a bill of sale. However, you might want to draft one if you’re selling something like a TV or a valuable antique.

In short, it’s a good idea to have a bill of sale any time you’re selling a vehicle or something of significant value. For items of lesser value, you probably don’t need one.

3 Steps for Writing a Bill of Sale

A bill of sale is a straightforward document that anyone can handle. Here are three easy steps for making your own.

Step #1: Find Your State’s Requirements

Some transactions are regulated by state law, which may require a bill of sale. The most common example of this is the sale of vehicles, motorcycles, and boats. In most states, you need a bill of sale for any type of titled personal property.

However, some state laws provide that the title itself qualifies as a bill of sale, so a separate document isn’t needed. This is why it’s important to check your state’s laws before going forward with the transaction.

Additionally, states that regulate bills of sale for the transfer of vehicles often have specific formatting and information requirements. For example, your state might require that all bills of sale for motor vehicles be notarized. In other states, a vehicle bill of sale must list out the make and model of the car, as well as its mileage and condition.

To ensure you’re protected and fully compliant with the law, research your state’s requirements for bills of sale. In most cases, you can also find a template approved by the state agency that regulates your type of transaction.

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Step #2: Consider Using a Template

Bills of sale are common documents, which means there are many free templates available online. By using a template, you can feel more confident that your document includes all the details it needs.

Additionally, office supply stores often sell printed bills of sale with blank spaces you can fill in when you make a sale. In most cases, these come in a convenient bundle with carbon copies underneath so the seller has a copy of the document.

These are often popular among small business owners who need a fast and easy way to manage inventory and provide their customers with a bill of sale.

Whether you use a pre-printed form you buy at a store or print out your bill of sale from a template, you should always retain a copy for your records.

Here are some templates for bills of sale you can find online:

Step #3: Use This Checklist to Know What to Include

Once you’ve found a template you like, you should review it to make sure it includes all the information you need for a legally compliant bill of sale. Keep in mind that it’s always better to err on the side of too much information rather than too little.

A general bill of sale should include the following:

  • Names, addresses, and contact information of the buyer and seller
  • Date of the sale
  • Amount the buyer paid for the property
  • Description of the property
  • If the item is being sold as-is, a statement for this
  • If the item is being sold with a warranty or guarantee, any representations of warranty from the seller
  • Signatures of the buyer and seller (notarized if required by state law)

If you’re selling a motor vehicle, the bill of sale should also include:

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

Should You Sell Property As-is or With a Warranty?

In most states, if you don’t include warranty information on a bill of sale, the law assumes the property is sold in as-is condition. However, if you include any promises, guarantees, or warranty information in the bill of sale, a future court could hold you to them.

This is why it’s important to be specific about what you’re promising. When it comes to the sale of used personal property, it’s quite common for sellers to specify that the sale is for property in “as-is condition.” This way, they’re not on the hook for guaranteeing the property’s condition down the road.

For example, if you sell a car “as-is” you aren’t responsible for any repairs if the air conditioning breaks three months after the sale.

On the other hand, state laws typically prohibit sellers from knowingly concealing an item’s defective condition. If you try to hide a flaw and the buyer later discovers it, it might not matter if you sold the property as-is.

In sum, both the seller and the buyer must deal with each other honestly. If you’re the buyer, you should conduct a reasonable inspection of the property you’re purchasing before you agree to buy it as-is.

What to Do with a Bill of Sale

Once you’ve filled out the bill of sale and completed your transaction, you should retain one copy of the bill of sale and give another copy to the buyer. The bill of sale is your record that the transaction was completed.

In some states, you may need to produce the bill of sale when you register your vehicle or transfer the title.

FAQs About How to Write a Bill of Sale

What is the difference between a bill of sale and a receipt?

A bill of sale is a legal document that transfers ownership of an item and includes details about the sale, such as the date, the names and addresses of the buyer and seller, and a description of the item. A receipt, on the other hand, confirms payment for a transaction and includes details such as the date, the names and addresses of the buyer and seller, and a description of the item. In short, a bill of sale documents the transfer of ownership while a receipt confirms payment for a transaction.

Can I use a bill of sale for any type of transaction?

A bill of sale can be used for a wide range of transactions, including the sale of vehicles, personal property, and even pets. However, it is important to note that not all transactions require a bill of sale and the specific requirements can vary by jurisdiction. It is always a good idea to consult with an attorney or knowledgeable professional to determine if a bill of sale is necessary for your specific transaction.

How long is a bill of sale valid?

The validity of a bill of sale can vary depending on the jurisdiction and the type of item being sold. In general, a bill of sale is considered valid as long as it accurately reflects the terms of the transaction and is signed by both the buyer and the seller. However, it is always a good idea to consult with an attorney or knowledgeable professional to determine the specific validity period for your bill of sale.

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Host of Netflix's "How to Get Rich", NYT Bestselling Author & host of the hit I Will Teach You To Be Rich Podcast. For over 20 years, Ramit has been sharing proven strategies to help people like you take control of their money and live a Rich Life.