Bill of Sale
What is a bill of sale?
When properly completed, a bill of sale is a document defining a transaction between two or more parties. It transfers ownership of the property, defined on the bill of sale, from the seller to the buyer. It demonstrates to third parties that the holder has right of possession and ownership.
How does it work?
With ownership and/or possession of an item of property one has privileges and responsibilities. A properly administered bill of sale transfers these rights and responsibilities from the buyer to the seller. These transferred rights relate only to possession and ownership. Other documentation relative to the property may be required of the seller and/or buyer to satisfy third party requirements - like DMV or lending institutions.
Example: an automobile title registered with DMV may require additional document processing. This title transfer removes the seller as responsible party from the DMV records and places the buyer as the responsible party.
Example: an item financed by a lending institution may have a lien against the title for the balance of the loan amount. A lien release must be executed by the lending institution or they maintain the lien against the property. Once the loan is paid in full the lien is released and title is free for transfer to the buyer.
A bill of sale may be important in addition to signing over of a title or deed. The bill of sale allows the buyer and seller to commit to writing any terms of the sale.
Example: The bill of sale may include a clause stating condition of the specified property. Possibly "As is". Possibly warranted for 30 days. And etc.
When do I need a bill of sale?
To be safe one should execute a bill of sale for any "significant" sale or purchase.
A bill of sale protects the buyer regarding their right of ownership and/or possession. The bill of sale simply tells the world that the buyer has right to said property.
A bill of sale protects the seller via termination of the inherent responsibilities that go along with ownership and/or possession. Once any additional documentation processes relative to the specified property have been completed, the seller as an example could terminate insurance coverage on said property.
Best for both parties.
It is in the best interest of both parties to execute a valid bill of sale for all "significant' transactions. Protect yourself. Get a bill of sale.
Bill Of Sale Forms By State