bill of sale

The Ins and Outs of Bills of Sale

A bill of sale is a legal document that records the transfer of ownership of an item, like a vehicle, from one party to another in exchange for money or other compensation. Bills of sale serve an important purpose by documenting key details about high-value transactions. But what exactly should you know about bills of sale? Let’s break it down.

What to Include in a Bill of Sale

A basic bill of sale should contain certain key pieces of info:

• Date of sale
• Information about the buyer and seller (names, addresses, etc.)
• Description of the item being sold (make, model, year, VIN, etc. for vehicles)
• The sale amount or other compensation
• Signatures of both parties

Including these details provides critical proof that the transaction took place and that ownership of the item changed hands from one party to the other.
Some bills of sale go even further to spell out additional terms, like whether the item is being sold “as is,” if any warranties are included, when payment is due, who pays taxes and fees, or other conditions that the parties agree to.

Why Do You Need One?

There are a few key reasons why a bill of sale can be useful:

Protects Against Disputes

Having a signed document that records important transaction details can help resolve or even prevent disputes between a buyer and seller. For instance, if the seller later claims that the buyer still owes money, or if details about what was included in the sale come into question, the bill of sale provides a reference to set the record straight.

Serves as Proof of Ownership

When you purchase a major item, especially a vehicle, having proof that you acquired ownership legally is essential. A bill of sale signed by both parties demonstrates that the property exchanged hands through a legitimate transaction. This documentation could be required to register a vehicle with the DMV, acquire insurance coverage, or take other actions that require validating your ownership.

Aids with Taxes

Bills of sale often record what amount the buyer paid the seller for the item. This provides documentation of the asset value, which could have implications for taxes if you later go to sell or otherwise dispose of the item.

What About Vehicle Bills of Sale?

Bills of sale play a particularly crucial role when it comes to vehicle sales and transfers of ownership. In most states, having a bill of sale is required along with the vehicle’s title to properly register a car or truck with the DMV. Requirements for vehicle bills of sale can vary by state but often include:

• Odometer reading
• DMV registration number (in some states)
• Dealer number (if purchased from a dealer)

Review your state’s specific documentation requirements when selling, buying, or transferring ownership of a motor vehicle. Templates and online tools can also help ensure you capture all the vehicle-related details a bill of sale should record.

What to Do After Completing the Bill of Sale

Once you and the other party finalize and sign the bill of sale, make copies so both of you have records for your files. These documents protect your legal rights going forward.
When selling an item, it’s also a good idea to notify your insurance company about the ownership change. And if you purchased a vehicle, trailer, boat, or other item that requires registration, submit paperwork right away to the DMV or other agency to record the update. This ensures your asset is properly documented in your name.

Watch Out for Fraud

Unfortunately, fake bills of sale also crop up on occasion when people attempt frauds. Some things to watch out for include:

• A buyer insisting on drafting the bill of sale even though it’s the seller’s responsibility
• Errors or missing details that raise suspicion
• Hesitation to include ownership transfer fees in the sale amount
• Unwillingness to meet at an auto insurance provider’s office to transfer a vehicle title

If you sense shadiness, trust your gut feeling and reconsider completing the sale. A legitimate buyer or seller should readily agree to reasonable documentation requests and meet in a safe location.

Alternatives to Traditional Bills of Sale

Technology now provides some alternatives to documenting transactions with traditional pen-and-paper bills of sale. For example:

Electronic Signatures

Rather than physically signing a printed bill of sale, services like DocuSign allow all parties to add e-signatures that carry the same legal weight. This option can be handy when buyer and seller can’t meet in-person.

NFTs

Non-fungible tokens (NFTs) represent another possible digital alternative for formally recording asset transfers. The buyer and seller just need to confirm the digital token exchange via blockchain technology. However, NFT tech remains newer and less commonly used for everyday transactions at this point.

When to Consult an Attorney

While bills of sale don’t require attorneys in most cases, consider having one review your paperwork if you are dealing with:

• Real estate transactions
• Business partnership agreements
• Sale of partial business ownership
• Disputes over asset ownership
• Recovery of stolen goods

These examples involve high-value items or complex legal dimensions where getting professional legal advice can provide extra protection. An attorney can look out for your best interests and ensure proper handling of ownership documentation.
Bills of sale serve the simple purpose of recording key details about asset sales or transfers, but having these documents available provides vital evidence if any questions or issues pop up down the road. So while the process of buying, selling, or owning valuable property may get complicated quickly, keeping proper documentation like bills of sale makes the legal dimensions a little more straightforward.