Selling or buying a motor vehicle from a private person is usually not as simple as handing over legal tender in exchange for the item. In most states, owning a motor vehicle has specific prerequisites, and the purchase of motor vehicles needs to be recorded with appropriate documentation to be valid.
That's where a Vehicle Bill of Sale comes in. It records the transfer of ownership and allows the purchaser to register the vehicle in their name with their local DMV. When purchasing a motor vehicle from a dealer, the dealer provides a Vehicle Bill of Sale as part of the transaction.
A Vehicle Bill of Sale is a legal document proving a seller sold a car to a buyer, and both parties agreed to the terms of the sale. Some states provide a state-specific Vehicle Bill of Sale, but the seller drafts their own in most cases. Typically, a seller prepares a Vehicle Bill of Sale. It is a legally binding contract and typically executed after the money has changed hands. It gives buyers little recourse to back out of the agreement.
A Vehicle Bill of Sale acts as a receipt in a motor vehicle purchase. The seller uses it to prove they sold the vehicle under specific conditions. The buyer uses it to prove they made full payment in exchange for the vehicle's ownership under the accepted conditions.
A Vehicle Bill of Sale's contents vary based on your local requirements, but a few essential elements are always present.
Depending on your state, a Vehicle Bill of Sale may also be known as:
Motor Vehicle Bill of Sale
Vehicle Proof of Purchase
Motor Vehicle As-Is Bill of Sale
Vehicle Proof of Sale
Proof of Payment for Motor Vehicle
In most cases, the person selling a vehicle initiates a Vehicle Bill of Sale with the sale terms. However, anyone purchasing or selling a motor vehicle should insist on using a Vehicle Bill of Sale to document the transaction.
Using a Vehicle Bill of Sale is often necessary (and recommended) even when selling a motor vehicle to friends or relatives. Proving ownership of the vehicle is part of the registration process regardless of who the previous owner was or their relationship to the buyer.
Additionally, some states require the use of a Vehicle Bill of Sale even when the motor vehicle is a gift. If applicable, states use it to calculate the buyer's sales tax during the title transfer.
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A Vehicle Bill of Sale requires several vital elements to be valid and enforceable. It is crucial to use a reliable and proven form generator. With 360 Legal Forms, all you need to do is provide some necessary information about the vehicle sale and the parties involved, and we'll make sure your agreement is worded correctly for your jurisdiction.
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To create your document, please provide:
Purchaser: The full name and address of the person buying the motor vehicle
Seller: The full name and address of the person selling the motor vehicle
Date: The date when the transaction is executed
Payment Method: The method by which the purchaser compensates the seller
Description of Vehicle: The year, make, model, VIN, and other relevant information about the vehicle being sold
Consideration: The amount of money or further compensation given in exchange for the transfer of ownership
Odometer: The odometer reading of the vehicle when the Vehicle Bill of Sale is executed
Terms and Conditions: Any additional terms and conditions specific to the vehicle needed to be added, such as an "As Is" statement
Encumbrances: Claims against the vehicle by any party that may prevent the transfer of ownership
Governing Law: The state's laws controlling and authorizing the Vehicle Bill of Sale
Merchantability: An item's condition that's acceptable under normal circumstances
Promissory Note: A section of the Vehicle Bill of Sale in some states containing a written obligation to pay a stated sum to a person upon demand
To be legally enforceable, a Vehicle Bill of Sale must be signed by the purchaser and seller. If the signatures are notarized and witnesses are used to validate the signatures, the notary public and witnesses' signatures are also required.
Once executed, the purchaser and seller should keep a signed copy of the Vehicle Bill of Sale for their records. As a buyer, you may need the Vehicle Bill of Sale to transfer the title in your name.
A Vehicle Bill of Sale does not need to be filed with any local or state records office since it is a private contract. However, a Vehicle Bill of Sale is required to register a motor vehicle in most states. In those cases, a copy will be needed for the DMV for the registration process.
In most states, a Vehicle Bill of Sale doesn’t need to follow a specific format. If that’s the case, some sellers simply scribble on a piece of paper and call it a Bill of Sale, but that is not recommended. Also, some states require the use of an approved Vehicle Bill of Sale form. Check with your local DMV to find out if you need to use a state-approved form.
The Vehicle Identification Number (VIN) is a unique code assigned to every vehicle authorized for sale in the United States. It’s typically a 17-character code and it can be found in the door frame, on the engine, around the steering wheel, or on the dash near the windshield of the car.
As long as the seller doesn’t lie about flaws or imperfections or take steps to hide flaws or imperfections, a buyer has little recourse after the fact if a car is purchased in “as is” condition.
Both documents serve a similar purpose. However, a Sales Agreement is used when a transaction is more involved and complex and usually includes several clauses specific to the sale, such as if the seller asks the buyer to pay the financing company directly to obtain the title. A Vehicle Bill of Sale is more straightforward and covers all the bases needed to transfer ownership of a motor vehicle without being overly complex.
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.
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