How to Write a Bill of Sale (With Templates)

Pooja Batra
Last Updated:

3 Feb 2023

Published On:

3 Feb 2023

min read

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As a business owner, it's crucial to have legal protection in all aspects of your business dealings. A bill of sale is a simple yet effective way to secure the transfer of ownership of business assets and provide legal protection in business transactions. In this guide, we'll explore the benefits and best practices of using a bill of sale for business protection.


I. What is a Bill of Sale?


A bill of sale is a legally binding contract that records the transfer of ownership, right, interest, or title over a property to another party in exchange for money. It can be by way of security or absolutely, without having the actual physical possession of the property being transferred. It is usually used to help sell or purchase property with significant value or uniqueness, such as aircraft, automobiles, motorcycles, trailers, and watercraft. 



II. What are the Different Types of Bill of Sale?


There are two main types of bill of sale: absolute bill of sale and conditional bill of sale. 


An absolute bill of sale only acts as evidence for the transaction but does not represent any kind of security.


Whereas a conditional bill of sale concerns the transfer of personal possession of a property to a person through security in exchange for money, the title remains with the seller. The transfer of ownership only occurs when the performance of certain conditions is met, such as the payment of debt.


III. Why do you need a Bill of Sale?

A bill of sale is a record of transfer of ownership from buyer to seller. It not only acts as an evidence of the sale transaction but can also be used to transfer ownership to a new owner if the item is sold again in the future.


The Bill of Sale offers legal protections to the buyer and the seller. It acts as evidence that a transaction did take place. By recording down the agreed terms, both parties get to refer to them in the case of any disagreements. This likely decreases the possibility of disputes or misunderstandings between the parties and maintains the transparency of the transaction.


Furthermore, it is required in most states in the United States for a buyer to have a bill of sale to register their vehicle or livestock purchases. Nonetheless, there are certain transactions that do not require a Bill of Sale, which include real estate, the performance of services, and small-scale sales.



IV. Key Components of a Bill of Sale


1. Parties Involved


The full name, address, and signatures of the seller and buyer should be included in the agreement. 


2. The Date of the Sale


The date of the sale and purchase should be specified in the agreement. 


3. Description of Item


The details of the property being transacted should be described in detail. The description includes serial number, model, color, features, faults, mileage on teh or any other important details. If the bill of sale is for a vehicle, the description must include: 1) vehicle model, make, and year, 2) mileage on the odometer, 3) description of the motor vehicle, 4) vehicle identification number or serial number, 5) hull number for boats only.


4. Price paid for the transfer of ownership 


The exact price of the property being sold should be written down. If the property is a gift or partially a gift, it should be stated clearly in the bill of sale. 


5. Warranty/Guarantee


A warranty refers to a written guarantee issued to guarantee that the seller has the full title to the property and is passing that to the buyer. This is called the “warranty of ownership”. 


On top of this, there should be a warranty by the seller describing the condition of the property, listing any defects with the property that the seller has knowledge of. It should also state that the property is sold “as is”, meaning that the property is being bought by the buyer at the current condition and the buyer is accepting the property with all faults, regardless of whether the faults are apparent. Still, if the seller has knowledge of any faults to the property, the seller must disclose it to the buyer, or else the sale may become void from future claims. 


On the other hand, it can be possible to transfer ownership of property without any warranties over its title. In this case, any interests that the seller currently has over the property will be transferred to the buyer, excluding any interests that the seller does not have.


6. Indemnity Clause


An indemnity clause is a promise by the seller to be responsible for and cover the loss of the buyer in cases when it would be unfair for the buyer to bear the loss. This clause transfers the liability of the buyer to the seller. This can protect the buyer from third-party claims to the property. 


7. Payment Method


The payment method should be specified. It can be in installments or in full by cash, check credit card or bank deposit. 



V. How to create a Bill of Sale


Follow these steps to create a Bill of Sale:


1. Identify the parties involved

It is important to clearly identify the buyer and seller in a bill of sale by including the full name address of the the buyer and seller


2. Describe the item being sold

The bill of sale should accurately describe the item being sold. it is advised to include all relevant details such as the make, serial number, model number to describe the item and avoid conflict in future


3. Include the sale price

It should clearly state the amount agreed upon for the sale of the item.


4. Sign and date the document

A signed bill of sale confirms that both parties have agreed to the terms of sale on the date specified therein


5. Obtain a copy for each party

Both buyer and seller should receive a signed and dated copy of the bill of sale for their records.



VI. Legal Considerations for a Bill of Sale


It is important to consider the following legal considerations:


1. Jurisdiction: Find out the requirements of your jurisdiction


The laws governing a bill of sale vary by country, and it is important to understand the local laws applicable to your bill of sale to ensure compliance and that it is legally binding


Certain transactions of property require a bill of sale by certain jurisdictions, which usually includes vehicles, motorcycles, and boats. However, some jurisdictions do not require a separate document of the bill of sale and regard the title of the property itself as qualifying as a bill of sale. 


Additionally, jurisdictions and states often require specific formatting and information to be included in the bill of sale. 


Therefore, to ensure parties are protected and in full compliance with the law, research on the requirements for the bill of sale is necessary. 


2. Accuracy and Completeness: Include the key components of the bill of sale


Bill of Sale must include all the the key components listed above.


First, the right name and physical address of both parties should be included. It is important for parties entering into a bill of sale to have the right contact information of the other party so that when there are problems or disputes over the property title, the party can get into immediate contact with the other party. 


Second, it is recommended that the seller can use the “as is” provision, as explained in more detail in the above section, to specify that they are only guaranteeing the property’s condition now, not in the future. On the other hand, if the seller includes any promises, guarantees, or warranty in the bill of sale, the seller would be guaranteed, to a certain extent, the property’s condition in the future. This would increase the chance of the seller being liable in court. Therefore, to be safe, if the seller were to include any promises, guarantees, or warranty in the bill of sale, it is recommended to be specific about the extent of the promise. 


3. Signature of both parties: Give the completed bill of sale to the buyer for signature


The seller should give the buyer the completed bill of sale only when they have received the money from the buyer and the transaction is complete. This is to protect the seller from any default by the buyer. If the bill of sale stipulates that the seller has already been paid despite it being false, it would make it difficult for the seller to collect any outstanding payment by the buyer. 


Also, both the seller and the buyer should retain a copy of the bill of sale for the record of the transaction. In some jurisdictions, the bill of sale may be required to be present during the registration of the property or transfer of the title. 


4. Transfer of Title

The Bill of sale acts as an evidence of transfer of title to the buyer, therefore, it should clearly state that the title is being transferred from seller to buyer. It is important to note that a bill of sale does not make the buyer an owner of the item. Therefore, a bill of sale is not a proof for transfer of title. A buyer has to apply for title transfer after bill of sale is complete. 


5. Notarization 

Notarization is a process whereby the a notary public certifies the authenticity of any signature appended to a document.  Depending on the local laws applicable to your bill of sale, notarization of the bill of sale may be required for it to be legally binding.


VII. Tips for Creating a Bill of Sale

Here are some ready tips by experts that will come in handy when creating a Bill of sale:



πŸ‘ Accurately describe the item being sold

πŸ‘ Include the date and names of buyer and seller

πŸ‘ Specify the sales price and method for payment

πŸ‘ include any warranties or guaranties

πŸ‘ have both parties sign and date the document



β›” Don't include false information

β›” Don't leave any important details blank

β›” Don't sign the bill of sale until all parties have agreed on the terms

β›” Don't assume that a bill of sale is legally binding without proper execution and signatures


VIII. Important Bill of Sale Templates


We have created various common bill of sale templates for you to use:


1. Bill of Sale - Personal Property


For large scaled property such as cars, the bill of sale is often used to transfer the ownership of the cars to the buyer without having the buyer be in physical possession of the car. This bill of sale template is for cars specifically. 




2. Bill of Sale - Transfer of Vehicle Car


For large-scale personal property such as cars, the bill of sale is often used to transfer the ownership of the cars to the buyer without having the buyer be in physical possession of the car. This bill of sale template is for cars specifically. 




3. Bill of Sale - Transfer of Vessel Ship Boat


For large-scale personal property, the bill of sale is often used to transfer the ownership of the cars to the buyer without having the buyer be in physical possession of the car. This bill of sale template is for vessels, ships, and boats specifically. 




IX. Conclusion   


In conclusion, a bill of sale is a valuable asset for any business owner, providing legal protection and peace of mind in the transfer of ownership of business assets. Whether you're a small business owner or a seasoned entrepreneur, maximizing legal protection with a bill of sale is an investment in the long-term success of your business.


Please note that this is a general summary of the position under common law and does not constitute legal advice. As the laws of each jurisdiction may differ, you may wish to consult your lawyer.


Pooja Batra

Pooja has more than 8 years of in-house legal experience in large MNC’s. She has advised on a wide range of corporate and commercial matters including drafting, reviewing and negotiating a variety of commercial contracts and other agreements across various business lines. If you would like to become a contributor to DocPro, please click the link below:



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