What is a Bill of Sale?
A Bill of Sale documents a private sale between two parties: the buyer and the seller. It acts as a sales receipt for the exchange of goods for compensation. A Bill of Sale helps prove the transfer of an item’s ownership from the seller to the buyer.
A Bill of Sale is also known as a/an:
- As-is Bill of Sale
- Private seller Bill of Sale
- Proof of purchase
- Sales receipt
What can I use a Bill of Sale for?
Use a Bill of Sale agreement to document the private sale of goods. You can use a Bill of Sale for the sale of:
- Motor vehicles: such as cars, trailers, bikes, ATVs, motorcycles, or other automobiles
- Equipment or tools: such as tractors, exercise equipment, or power tools
- Watercraft: such as boats or jet skis
- Animals: such as goats, horses, or other livestock
- Personal property: such as clothing, furniture, and jewellry
Remember that you can’t use a Bill of Sale to sell land or real estate. You also can’t use a Bill of Sale to purchase a business.
How do I make a Bill of Sale?
You can create a Bill of Sale on your own using LawDepot’s Bill of Sale template. Complete the following steps:
1. Provide property details
Start by providing the property’s location. The current location of the property normally governs a Bill of Sale.
Next, provide the property’s details. For example, if you are selling a used car, you will need the following information:
- Make
- Year
- Model
- Body type
- Vehicle identification number (VIN)
- Odometer reading, accuracy, and details
2. Supply both parties’ information
List the name and address of both the seller and the buyer. If necessary, you can add more than one seller or buyer to your Bill of Sale.
3. Provide the price
Provide the property’s price. If sales taxes are applicable, you can choose to include VAT in the price or in addition to the price. Include the form of payment. The purchaser can make a payment in the following forms:
- Cash
- Bank draft
- Cheque
- Electronic funds transfer
- Promissory Note (also known as an IOU)
- Other
A bank draft is a cheque that draws the bank's own funds from its account with another bank.
If you wish to transfer the property as a gift, use a small amount such as $1.00 or $10.00 as the price.
4. Note any loans or liens
If there are any loans or liens against the property, make sure to note them. Determine whether the buyer or seller will pay off the remainder of the loans. Describe the arrangements for loan or lien repayment.
A bank will not typically allow you to transfer a car loan to a buyer. You shouldn’t accept or mention a bank loan where the seller is personally liable because the seller will pay it off with the sales proceeds.
If a loan or lien passes to the buyer, the seller should reduce the purchase price by its corresponding amount.
5. Add additional clauses
You should include an additional clause if there are any terms or issues unique to your situation that the questionnaire doesn’t address.
In order to reduce confusion, write your clauses with plain language and limit them to one paragraph in length.
6. Sign the document
Provide the date on which both parties will sign the document. If you’re not sure when the parties will sign, select “unsure” in the questionnaire.
By selecting "unsure" for the question, you’ll get a blank line to fill in with the correct date after you have printed the document.
Some jurisdictions require the purchaser to sign the Bill of Sale while others only require the seller’s signature. Check your local laws to verify whether you are required to include the purchaser's signature. It won't cause any problems if the purchaser signs the Bill of Sale, so it’s best to have the purchaser sign the document if you’re unsure.
Most jurisdictions don’t require that the parties sign the Bill of Sale in front of witnesses. However, if there’s an ownership dispute, having an objective witness provides evidence that the parties entered into the Bill of Sale in good faith. Having at least one witness is a good idea especially if the parties are individuals instead of companies.
Is a Bill of Sale a legal document?
Yes. A properly created Bill of Sale is a legal document.
You don’t need a lawyer to create a Bill of Sale. However, there are certain criteria that the document needs to meet to be valid. To ensure that you include all the necessary details, simply complete our Bill of Sale template and print off the document.
What’s the difference between a Bill of Sale and an invoice?
A Bill of Sale is a document that records the exchange of goods for compensation. In comparison, an invoice is a document that a seller provides to a buyer that owes them a payment, outlining how much money they owe.
In some provinces, a seller provides an invoice before they receive payment. The seller or buyer produces a Bill of Sale after the transaction is complete.
Similarly, a receipt isn’t a Bill of Sale, but a Bill of Sale may serve as a receipt.
When should I use a Bill of Sale?
Use a Bill of Sale any time you are a party involved in the private sale of property. It’s especially important to use a Bill of Sale if you’re selling a vehicle or firearm, as a Bill of Sale provides evidence of the transfer of ownership from one party to another.
A Bill of Sale can come in handy if there’s ever a dispute over the ownership of the item or its condition. Also, the buyer can prove that they gave the agreed-upon payment (including any trades) in full to the seller.
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