5 Things to Know Before Writing a Bill of Sale

5 Things to Know Before Writing a Bill of SaleBusiness transactions can be complicated, whether you’re buying a latte from Starbucks or a used car from a stranger at the local lot. Before selling anything well above 500$, it is advisable to write a bill of sale for the transaction.

A bill of sale is a document that records the details of a business sale. It’s a legal requirement in many states and forms the basis for transferring title from seller to buyer. When you sell your business, you won’t have to worry about any of the details involved in the transaction. That’s because you have a business and know how it works. On the other hand, the buyer may not have much experience with running a small business and may not understand some of the terms. You’ll want to make sure they know exactly what they’re getting into. In this article, we look at the five things you need to know before writing a bill of sale.

  1. Is a bill of sale a binding contract?

Yes, a bill of sale is a legally binding contract. Of importance is to make sure that you comply with your state’s requirements. Keep in mind that these requirements vary from state to state. For example, most states only require the buyer to sign the bill of sale, while in other states, both parties must sign it. Although not common, some states also require the bill to be notarized.

Generally, a bill of sale requires to have the following information:

  • Purchase date
  • Address and names of both the seller and buyer
  • Signatures of the seller and buyer
  • A comprehensive description of the property or car being transferred
  • Amount paid for the ownership transfer
  • A guarantee that the item or property has no claimant whatsoever

If the bill of sale is for a car, it should include:

  • The make, model, and year of manufacture of the car
  • Mileage already taken
  • Vehicle serial and identification number
  • A description of the vehicle
  1. Can you handwrite a bill of sale?

As long as the bill of sale, be it for a property or car, have all the information listed above, it can be handwritten. Just make sure that all the essential requirements from your state are included in the bill of sale. Some states don’t provide a sales form. However, you can access the Colorado bill of sale online for conditions like Colorado.

  1. How to write a bill of sale

Any person can write a bill of sale as long as it follows the guidelines and meets all the requirements. For it to be a legally binding document, some information must be present in the bill. For example, the seller’s and buyer’s name and addresses, payment method, the previous owner, amount paid, a comprehensive description of the item or property sold, and  any agreements made if the payment was partially completed. Refer to section 1 above for all the mandatory information included in a bill of sale.

Reread your bill of sale to make sure there are no mistakes. If you have any doubts, you can acquire attorney services to help you out with them.

  1. Different types of a bill of sale

There are different guidelines set by every state that should be followed. The validity of this bill of sale varies depending on these guidelines.

Below are the most common types of bills of sale;

  • Conditional bill of sale. This is the transfer or assignment of property to a creditor whose lending money to a debtor to use as security. If the debtor does not honor the payment agreement, then the creditor has a right to keep the property.
  • Absolute bill of sale. This represents the transfer or sale of goods and doesn’t represent any security found in the title.
  • Warrantied bill of sale. This type of bill of sale shows that the seller owns the property and has all the rights to make a transfer. It serves as a guarantee.
  • Bill of sale for a vehicle. This type is not required in all states. If the bill of purchase adheres to the guidelines set and complies with requirements, you can draft your own in some states. You can also access free-to-use bill of sale forms on wa.gov.
  • Quitclaim bill of sale. This one is used when the seller cannot guarantee that he owns the property or vehicle or if they don’t want to warrant it.
  1. When to use a bill of payment

The primary purpose of the bill of sale is to help with the buying and selling of items that have significant value, such as boats, motorcycles, aircraft, automobiles, and trailers. Some states also require you to have a bill of sale for animals sold, just so there’s proof of purchase. Clothing items have much less value; in this case, the owner decides whether they need the bill of sale or not. For more information on bills of sale, check out this website.

Of importance to note is that the only way to prove ownership is by title transfer. A bill of sale does not prove ownership. In most cases, your state’s DMV requires you to carry the bill of sale to them to complete the transfer of title and paperwork. Even though you can also present yourself, it is advisable to have legal advice from an attorney. Different bill of sale types has different rules. Therefore, an attorney will be a valuable source.


Knowing when to use a bill of sale and if it’s a mandatory requirement can be pretty daunting. However, having the information on hand makes even the selling or buying procedure easy. Learn the different types of the bill of a sale there are and the rules attached to them. When to use the bill of sale, and if it’s necessary to use one depending on the deal you’re making. This article has tackled what you need to know about a bill of sale.

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