Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
A bill of sale is a legal document that provides proof that ownership of a vehicle was transferred to a buyer. This document may be required in order to take title to a vehicle, register the vehicle or obtain insurance.
This guide explains what a BoS is, what it should include and why it is so important. Using a bill of sale template is an important way to ensure that your sale or purchase meets all the necessary requirements. Get a free template by entering your email below.
What Is a Vehicle Bill of Sale?
A vehicle bill of sale is a form or document that formalizes the transfer of ownership from a seller to a buyer. This type of document is typically used when the ownership of any kind of vehicle changes hands including:
- Cars
- SUVs
- Motorcycles
- Trailers
- Trucks
- Watercrafts
- Aircrafts
- Recreational vehicles
- Snowmobiles
- Off-road vehicles
A BoS form can also be used for other goods besides vehicles as well, such as for electronics, personal property, firearms or animals. It is not appropriate to use this type of form when selling services, as a service agreement should be used instead in these situations.
The purpose of creating a BoS is so the buyer and seller both understand the terms of the sale, such as how much money is changing hands and what property is being transferred. The form can also be used by the buyer to provide proof of ownership, which may be necessary when registering the vehicle or buying insurance.
A BoS is different from a sales agreement or sales contract, which may be necessary when the transaction is more complicated than a product simply changing hands. For example, if the buyer will pay for the item over time or if the seller is providing a warranty, a sales contract may be needed to outline the terms of the payment arrangement or of the guarantee.
What Is an As is Form?
When a vehicle is sold as is with no warranties or guarantees from the seller, then the form used to transfer its ownership is called an as is bill of sale. The as is form makes it clear the buyer is accepting the vehicle in its current condition and protects the seller from a buyer trying to obtain a refund after money and ownership have changed hands.
When Should I Use a Vehicle Bill of Sale?
This type of document should be used whenever you are transferring the ownership of any kind of vehicle. Generally, it is used when a private seller sells a vehicle to another person or entity.
A BoS should also be created when a seller gives a vehicle as a gift to someone. This creates a paper trail and ensures there is legal documentation as to the transfer of ownership rights.
Benefits of a Bill of Sale
A BoS has many benefits for both buyers and sellers. Here are some of the important reasons to create one:
- To document the transfer of ownership. If there are any questions as to who the current owner of the vehicle is or when the transfer of ownership took place, the form provides the necessary proof of when the buyer took possession.
- To show who the current owner is for purposes of registering and insuring the vehicle. The buyer usually needs to provide this document to show they are the legal owner before they can register the car or insure it.
- To provide proof of the sale transaction. Money usually changes hands when a sale occurs. A BoS form serves as a receipt or documentation of the funds received. This can be important for tax purposes.
- To protect the seller from faulty product claims. If a seller wants to sell a product in its current condition without the risk of a buyer coming back to them and claiming there are defects, a seller can create an as-is form.
- To establish the terms of the transaction. The form should include details on what property is being transferred, what its condition is and the payment terms. If there is conflict over these issues, the document provides guidance.
Both buyers and sellers benefit from the creation of this written document. It is in their best interests to make sure they have a comprehensive, enforceable proof of sale/purchase.
What Should Be Included?
A bill of sale should include:
- The names and contact details of the buyer and seller
- Date of the sale
- A description of the vehicle being sold including the make, model, year, VIN number, body type and odometer reading
- The amount of payment and the method of payment such as cash, check, bank draft or electronic funds transfer
- Whether any taxes are included in the exchange
- Whether there are any current liens against the vehicle and, if so, how the seller plans to resolve these outstanding claims
In many states, both a buyer and a seller must sign the BoS when a vehicle changes hands. However, in some cases, only sellers must sign this document in order for it to be considered legally valid.
It is important to understand your individual state’s rules. Using a template can help you to ensure your contract is comprehensive, enforceable and acceptable proof of a sales transaction in your jurisdiction.
Frequently Asked Questions (FAQs)
Does a vehicle bill of sale need to be notarized?
In most states, a vehicle bill of sale does not need to be notarized. However, a minority of states do require notarization before it can be used as proof of purchase to transfer title of a vehicle to the new owner. It is important to know the rules of the state where the transfer of ownership is taking place.
When does a seller deliver a bill of sale to a buyer?
Usually, a seller delivers a bill of sale to a buyer after money has changed hands and the transaction is officially complete. The form serves as a proof of purchase showing the buyer is now the new owner.
How can buyers and sellers avoid disagreement when selling a vehicle?
Buyers and sellers can avoid disagreements when selling a vehicle by making sure there is written proof of the transaction. If the transaction is a simple one where the buyer purchases the vehicle outright and the vehicle is sold in as is condition, then a bill of sale may be sufficient. If the transaction is more complicated, then a sales contract may be needed to outline all of the terms of the agreement between buyer and seller.
