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A Bill of Sale is used to document the transfer of an item’s ownership and eliminate any doubt about its lawful sale.

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When purchasing or buying an item, even one of modest value, a Bill of Sale helps document the terms of the transaction.

What Is a Bill of Sale?

A Bill of Sale is a legal document explaining the details of a sale. In other words, when you purchase or sell an item, you can use a Bill of Sale to record the transaction to protect it from being contested at a later time.

Typically, a Bill of Sale is only used to document valuable transactions, such as selling a vehicle or other valuable items. Most states require a Bill of Sale to accompany the private sale of a motor vehicle for sales tax assessment and ownership transfer at the DMV, so it’s a good idea to check your local laws before selling or purchasing valuable items.

However, a Bill of Sale can be used to document any sale, regardless of the amount of money in question. It’s not usually necessary to use a Bill of Sale to document a transaction recorded by other means, such as a receipt or an invoice.

Other Names for Bill of Sale

Depending on your state, a Bill of Sale may also be known as:

  • Purchase Agreement

  • Purchase Contract

  • Proof of Purchase

  • Statement of Sale

  • Note of Purchase

Who Needs a Bill of Sale?

In theory, anyone who wants to document a transaction legally can use a Bill of Sale to do so, as long as both parties agree to sign it. In practice, a Bill of Sale is only required for a few specific types of transactions and is broadly recommended for high-value transactions.

Typically, the onus is on the seller of the item to draft a Bill of Sale, but either party can create the document. A Bill of Sale protects the seller to a large degree because they will have to prove ownership of the item if there is a dispute in the future.

As a buyer, you’re well-advised to be prepared with your own Bill of Sale if you’re purchasing a vehicle. Vehicle sales often require a Bill of Sale, and some states demand a signed, dated, and even notarized Bill of Sale to complete the purchase of a motor vehicle.

A notable exception is the sale or purchase of real estate documented in a Real Estate Purchase Agreement and transferred via a deed.

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How to Create a Bill of Sale with 360 Legal Forms

A Bill of Sale needs to accurately reflect the terms of a sale if you want it to protect your rights surrounding the transaction effectively. With our proprietary form generator, all you need to do is answer a few simple questions, and we will create a Bill of Sale that conforms to your specific needs.

Let 360 Legal Forms help with our extensive library of attorney-vetted legal forms. The process is fast and easy. All you have to do is fill out our easy-to-understand questionnaire. Once complete, simply download your form as a PDF or Word document from your secure online account.

What Information Will I Need to Create My Bill of Sale?

To create your document, please provide:

  • Buyer: Full name and address of the person purchasing the item.

  • Seller: Full name and address of the person selling the item.

  • Item Description: A detailed description of the item in question. In the case of vehicle sales, this section needs to include specific information about the vehicle, including the make, model, color, VIN, model year, type of body, odometer reading, and other details depending on the state laws governing the sale.

  • Excluded Assets: Any items specifically excluded from a sale. This section is used for sales that encompass a category of items, such as everything inside a building. Any assets in the building, but aren’t part of the deal, should be expressly detailed.

  • Consideration: Anything given in exchange for the items in question. In this context, it typically refers to an amount of money.

  • Forwarding Address: If you haven’t already, give your landlord an address to send your security deposit and any notices once you’ve vacated the property.

  • Additional Terms and Conditions: Any other clauses that you need to include would go in this section. This may include conditions for the sale to be completed or other special agreements.

Bill of Sale Terms

  • Acceptance: In legal terms, acceptance refers to the unconditional agreement of the exact terms in a document.

  • Absolute Bill of Sale: A Bill of Sale that transfers ownership entirely and without restriction from the seller to the buyer.

  • Conditional Bill of Sale: A Bill of Sale that records a transfer of ownership that will happen when certain conditions are completed, usually accompanied by a Promissory Note.

Bill of Sale Signing Requirements

A Bill of Sale must be signed by both the buyer and the seller to be legally enforceable.

Whether or not you need to notarize the signatures on a Bill of Sale depends on the item in question. If you’re selling personal property other than a vehicle, notarizing the signatures isn’t typically required. However, some states require notarized signatures on a motor vehicle Bill of Sale. Notarizing the signatures is a good idea, in any case, to prevent either party from challenging them later.

What to Do with Your Bill of Sale

Once it’s signed, take a copy of the Bill of Sale to your local county clerk’s office or tax office to record the sale. The Bill of Sale must reflect the sale details accurately since it will be used to estimate your sales and use tax as applicable.

Keep a signed copy of the Bill of Sale for your records and distribute a copy to the sale counterparty. If the Bill of Sale documents a motor vehicle's sale, both the seller and the buyer should contact their local DMV to avoid misattributed tickets and citations until the car is retitled.

Frequently Asked Questions

It depends on the state laws governing the sale. Some states require that the sale is documented through a Bill of Sale. However, having a Bill of Sale is a good idea regardless of state law since it prevents future disputes.

A few jurisdictions don’t require the buyer to sign a Bill of Sale. However, it is highly recommended that a Bill of Sale is signed by both the buyer and the seller if you want to legally enforce it in the future.

No. A Bill of Sale is not a contract nor does it engender any kind of contractual obligation. It only acts as a proof of purchase for an item. A sales agreement, on the other hand, creates an obligation between two parties to conform to the details of a transaction.

When a buyer doesn’t fully pay for an item, but a seller still agrees to sell the item in exchange for deferred payments, the seller will draft a promissory note along with the Bill of Sale to ensure the buyer will pay in accordance with the seller’s terms.

Whether you use a Bill of Sale or not, any sale ostensibly generates a tax burden unless it involves items that are specifically excluded from being taxed. There are other taxes that may apply but as far as sales tax is concerned, private sales are not subject to sales tax as only merchants are authorized to collect it with a sales tax ID number. Exceptions are sales that require title transfers like vehicles, for which sales tax will be collected by either your home state or the state where the sale originated, depending on state law.

Yes. When doing so, the Bill of Sale should include a section that certifies the buyer is not restricted or forbidden by law to own a firearm and several provisions relating to the seller’s ability to possess, ship, and transport a firearm, their lack of prior convictions of a crime punishable by imprisonment, etc.

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