Bills of Sale - Everything You Need to Now

Bill of Sale

A Bill of Sale is a document that records the transfer of ownership of goods from one person to another in exchange for money. It is commonly used to record the sale of movable assets such as vehicles, electrical appliances, furniture, bicycles, personal property e.g. pets, horses. Bill of Sale can be used even for items that have a low value. There is a tendency to think it is only used for higher value items. It proves ownership by showing a consideration was made for the transfer of the item from the seller to the buyer. A Bill of Sale is not used for services. For these, you might need a general contract for services. ExecOS features a service agreement contract guide which you can find here.

Some people may refer to the Bill of Sale as a Purchase and Sale document. For items that have a Certificate of Title, the seller should give it to the buyer at the time of signing the Bill of Sale.

A Bill of Sale becomes even more important in instances where there is no other way to prove that transfer of ownership took place. Many transactions that involve cash between individuals have no documentary evidence that the buyer bought the item from the seller. This exposes them to legal problems should one party decide to challenge ownership.

Types of a Bill of Sale

Absolute Bill of Sale

An Absolute Bill of Sale also known as “as is” Bill of Sale means that there is no guarantee or security offered on the property’s condition. In other words, there are no written or verbal warranties made to the buyer by the seller that the property is free from defects. This form of a Bill of Sale protects the seller as the buyer cannot claim repairs or refunds once the property is sold.

Sometimes this kind of a Bill of Sale is also referred to as a Quitclaim Bill of Sale.

Conditional Bill of Sale


When a Bill of Sale is conditional, there is a provision for a limited warranty. This means that the seller needs to state exactly what damage is covered under the warranty and what parts or work repairs are covered during the specified warranty period. A Conditional Bill of Sale favors the buyer.

In conditional Bills of sale, the seller must provide all information that the buyer needs. If they represent the value of an item or withholds any important information, the Conditional bill of sale may be voided. Both parties should be aware of all terms and conditions of the conditional bill of sale before entering into the agreement so that any clarifications can be sought.

Is a Deed a Bill of Sale?

A deed, warranty, or any other form, is not a bill of sale. They do have a lot of similarities but are different documents. A deed is used for the transfer of ownership of real estate while a Bill of Sale relates to the transfer of tangible objects.

What is the importance of a Bill of Sale?

▪         A Bill of Sale records a sale or change/transfer of ownership.

▪    It releases the seller from liability and protects both buyer and seller from any disputes that may arise over the item in the future with regards to the sale.

▪         Sometimes used to determine the amount of tax in relation to the sale

▪         It may be used to determine how much sales tax you pay.

▪         Used as security for credit

Important Features of a Bill of Sale


▪         Seller’s name and address

▪         Buyer’s name and address

▪         Date of purchase

▪         Details of the item being sold. Color, make/ model, serial numbers, identification numbers, size, design, any unique marks, features, faults, etc.

▪         The value of the transaction paid written in words and in figures

▪         Special conditions to the sale i.e. sold as is, or with warranty

▪         The previous owner (if any)

▪         The method of payment i.e. in installments or in full, cash, check, credit card or bank deposit

▪         Any agreements regarding due dates for pending payments, late payments, and interest rates

▪         Signatures of the seller, of the buyer, and of a notary public

Vehicle Bill of Sale

In addition to the general features of a Bill of Sale, a Vehicle Bill of Sale must include:

▪          Vehicle type

▪          Make, model, and year of the vehicle

▪          Odometer reading

▪          Hull number

▪          Engine serial number

▪          Vehicle registration number

▪          Vehicle identification number

Check out everything you need to know about drafting a vehicle bill of sale through this video guide from eForms Miami.

Is a Bill of Sale Binding?

A bill of sale is considered binding. That’s why you’ll sometimes hear people refer to it as a Bill of sale Contract. It is a contract for the purchase of an item between the seller and the buyer. Together with other documents, they form a valid contract that proves the sale/purchase of an item. For this reason, most jurisdictions treat a Bill of Sale as legally binding.


The distinction in the use of a Bill of Sale in a transaction.

▪         Hire purchase.

Hire purchase is mainly applicable in the purchase of new goods but a Bill of Sale is used in the sale of goods the borrower already owns.

▪         Pawnbroking

Unlike in pawnbroking where the seller takes possession of the goods, a Bill of Sale allows the buyer to keep the goods while making repayments.

▪         Mortgages

Unlike mortgages on land, a Bill of Sale secures moveable tangible goods.

▪         Company charges

Unlike company charges – which are granted by companies and limited liability partnerships- Bills of Sale can only be granted by individuals and unincorporated businesses.

Who can write a Bill of Sale?

You can write out your own Bill of Sale when selling your property. You can also get a Bill of Sale form from your local department of motor vehicles or from your county offices.

For items that are not legally required to have a Bill of sale, you can still draft one. This includes items that are not of high value. Either the seller or the buyer can draft the bill of sale. it is an important practice to always have one when transferring ownership of items.

If you draft your own bill of sale, check your state’s legal requirements. Some states may require the document to be notarized while others specify how it should be signed.

Can a Bill of Sale be void?

A bill of sale can be voided in the following circumstances:


  1. Misrepresentation. A Bill of Sale can be void even if it is an “as is” Bill of sale if there is proof that there was a misrepresentation at the point of sale. You will need to file this complaint in the shortest time possible. Further proof will be required to show that the misrepresentation was on the description.
  2. Any Bill of Sale can be voided three days after the sale if the payment or security is not honored. For example, if a vehicle buyer files for bankruptcy or any other financial reason in which they cannot pay for the vehicle.
  3. Theft. If the property being transferred turns out to be stolen, then the Bill of Sale is immediately void.
  4. Sale by a minor. If the buyer is a minor, then the Bill of Sale can be void for any reason within a specified time period.
  5. Irregularities. Any irregularity in executing a Bill of sale will void it. The legal requirements differ by State. Some states may require it to be witnessed or notarized.

Bill of Sale FAQs

Does a Bill of sale require to be witnessed

In some states, a Bill of Sale requires a witness. Some even go further and require notarization. In most states, however, these two requirements are not defined in law. But it does no harm to have a witness during the signing of the Bill of Sale. It adds another layer of legal protection in case of a challenge later on.

Does the buyer need to sign the Bill of Sale

Again, this depends on the laws of the state where the transaction is taking place. However, most states do not have this requirement. If unsure, both the seller and the purchaser should sign.

What is the difference between a Sales Contract and a Bill of Sale

This is a common question. Both of these documents contain almost similar details. However, there is one key difference. One of the purposes of each of these documents. The Bill of sale proves the transfer of ownership while the sales contract contemplates the transfer upon the achievement of stated conditions.

In what instances should I not use a Bill of Sale

A bill of sale cannot be used to transfer ownership of real estate, and cannot be used for services


Having a Bill of Sale is a good practice to prove the transfer of ownership and for your personal records even for items that seem to be of low value. Since the Bill of sale transfers ownership, it should be used even in cases where no sale has taken place. In cases of gifts, exchanges, or any other situation where one person transfers ownership of an item to another. It can be used by individuals and businesses.

The bill of sale should be legible, signed by both the buyer and seller, and each retain a copy. These are the simple requirements needed for this document. Its only purpose is to show that ownership changed. It serves as legal proof that consideration was made for a specific item and transfer took place.

Cited resources
Great! You've successfully subscribed.
Great! Next, complete checkout for full access.
Welcome back! You've successfully signed in.
Success! Your account is fully activated, you now have access to all content.