What is a bill of sale?
A bill of sale is a legal document made by a ‘seller’ to a purchaser, reporting that on a specific date, at a specific locality, and for a particular sum of money or other “value received”, the seller sold to the purchaser a specific item of personal, or parcel of real, property of which he had lawful possession. It is a written instrument which evidences the transfer of title to personal property from the vendor, seller, to the vendee, buyer.
The bill of sale is a relatively simple legal document that transfers the title of an asset from one individual or entity to a new owner. In general, bills of sale include the minimum information necessary to confirm that the transfer of the ownership of an asset has taken place. Also, the bill of sale affirms the fact that the transaction was conducted in a manner that was agreeable to all parties involved in the transaction.
The bill of sale emerged as a way to minimize the incidence of fraud, as well as limit the potential for illegally seizing property. The present basic format for the bill of sale has its origins in the 19th century, and came about as a means of complying with regulations that were intended to prevent abuse of existing laws regarding the acquisition and holding or property, primarily land.
Essentially, the bill of sale today is a document that is drafted by the seller, and is couched inn verbiage that is intended to document all the pertinent details of the sale. Central to the structure of the bill of sale is the names and identifying data related to both the buyer and seller. This will always include the legal name of the buyer and the seller, and may also include the permanent physical addresses of both parties. A brief description of the item that is being sold will also be included.
What is the value of a bill of sale?
A bill of sale can help you certify a transaction and articulate the various rights belonging to each of the parties to the transaction. It is a valuable tool for reducing risk in commercial transaction.
How do you write a bill of sale?
A bill of sale is a document that verifies your purchase, and therefore your ownership of, a valuable asset such as a car, a TV or other large item. Not only does the bill of sale prove you legally own the item, it may be used to determine how much sales tax you pay. It also releases the seller from liability and protects both buyer and seller from any disputes that may arise over the item in the future.
Rules for bills of sale vary from state to state. For example, Michigan doesn’t require a bill of sale when buying or selling a car.
You may be able to get a bill of sale form from your local department of motor vehicles or from your county tax assessor-collector’s office. You can also write out your own bill of sale.
When writing a bill of sale, be sure to include:
The seller’s name and address
The buyer’s name and address
A description of the item being sold, including serial numbers, identification numbers, make, model, size, color, design, any distinguishing marks, features or faults [source: Cooper].
The vehicle identification number (VIN) and license plate number (if you’re writing it for a vehicle)
Special conditions to the sale (e.g. sold as is, with warranty, etc.)
The date of transaction
The previous owner (who sold it to the seller)
The amount paid (written in words and in numerals)
The method of payment (i.e. in installments or in full, cash, check, credit card or bank deposit)
Any agreements regarding due dates for pending payments, late payments and interest rates
Check your bill of sale for the following:
Make sure the bill of sale is legible.
Double-check all information and signatures on the bill of sale.
Make copies of the bill of sale for the buyer and seller.