What is a Bill of Sale?
A bill of sale is a detailed receipt for a purchase of an item, usually something large like a vehicle or of particular value. A bill of sale is generally used when two individuals initiate a transaction without the benefit of a business’s involvement or the help of a business’s recordkeeping.
In some places a bill of sale is similar to a deed of trust: instead of recording a purchase or sale, it is used to hold a property for collateral for a loan. This article describes that transaction as well as defines terms like the absolute bill of sale and conditional bill of sale.
When do you need a Bill of Sale?
When a small business accepts an order of goods from another, a bill of sale may provide proof that both parties found the goods acceptable. Some states have a lemon law for vehicle sales or another trial period that favors the buyer, allowing a sale to be canceled if the buyer is unhappy with what was purchased. A dated bill of sale may be the linchpin in a discussion of whether the buyer can return the item for a refund.
Insurance companies evaluating claims may want to see a bill of sale for expensive items or some similar proof that they were in the claimant’s possession before paying for replacements. Some sources suggest that bills of sale are important documents that should be retained in a safe place for such a situation.
Infotracer.com is an online database of information that may be used to research assets owned by individuals, including vehicles, boats, and more.
Differences Among States
Washington provides a bill of sale template with instructions to take the bill of sale along with other documents to the licensing office to register the vehicle, making the bill of sale an essential instrument in proving vehicle ownership.
Wisconsin likewise offers detailed instructions on selling a vehicle, such as signing the title, but says a bill of sale is strictly for the records of the new owner, the document is not a requirement.
A notarized bill of sale is required for car purchases in Maryland if the vehicle is seven years old or newer and is being sold below book value. The Maryland Department of Motor Vehicles provides a template to follow. A notary is a legal witness who stamps documents after witnessing signatures and examining proof of the identity of the people signing the document.
Arkansas requires a bill of sale signed by buyer and seller if the vehicle will be claimed as a tax credit toward the purchase of a newer vehicle. A template can be found by following the link.