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What is a Bill of Sale Most Commonly Used For?

A bill of sale is most frequently deployed for the purchase and sale of a motor vehicle. That being said, most states still require that the previous owner sign-over the vehicle’s title to the buyer, but the bill of sale can provide additional information regarding how the exchange transpired. Think of it as a receipt that may be referred back to in the event that there is ever a legal dispute or you need to supply evidence for tax reasons.

How to Privately Sell or Purchase a Motor Vehicle

There is a certain protocol that must be followed when selling or buying a vehicle during a private sale. A key component of that is the execution of a motor vehicle bill of sale. Below are a series of steps designed to guide you through the process.

Step 1 – Establish the Terms of the Agreement

Assuming the buyer and seller have come in contact with one another either through an ad or by word of mouth, both parties must discuss the terms and conditions of how the transaction will transpire. Specifics such as the price of the vehicle, method of payment, and what extras are included (if any) should all be negotiated prior to the signing.

Step 2 – Acquiring the VIN (Vehicle Identification Number)

Every vehicle contains a unique 17-digit code called a “Vehicle Identification Number”. It is typically found on the driver’s side dash but can be located in other areas of the vehicle as well. The buyer should ask the seller to provide the VIN in order to check the vehicle’s history. There are several sites where you can supply the VIN and receive a full vehicle history report. Some of the more popular sites include:

• CarFax.com – View the full vehicle history report for a fee of $39.99 (other deals are offered based on the number of reports you desire).
• AutoCheck.com – Purchase a single report for $24.99.
• VINCheckPro.com – One premium vehicle history report priced at $6.95 (less extensive report than previously mentioned sites).

A vehicle history report will only include information that was recorded by insurance companies, DMV’s, police departments, and mechanics. If an incident was not brought to the attention of one of the aforementioned, it will not appear on the report. To ensure that there are no hidden defects within the vehicle, a pre-purchase inspection by a mechanic of the buyer’s choice can be considered a good measure before completing the transaction.

Step 3 – Collecting the Vehicle’s Documentation

It is important that the seller collects all the vital paperwork regarding the vehicle in order to give it to the new owner. Such paperwork includes:

Certificate of Title – This is considered the most important document when it comes to the transfer of ownership. It contains specific information pertaining to the vehicle and allows the seller to sign over their rights of possession.

• Example – California Certificate of Title for Vehicle

Vehicle Registration – To operate a vehicle on public roadways, it is essential that you register the vehicle with the state in which you reside. When you do so, you are given a piece of paper proving that the vehicle is registered. You must provide the buyer with the registration upon transfer of ownership.

• Example – California Vehicle Registration

Bill of Sale – Once the buyer and seller have agreed upon the terms of the transaction, it is highly recommended to carry out a bill of sale. This form records specific sale information and typically requires that both parties sign and date the document. It may not be required in every state but is still considered commonplace as it works as a receipt of the transaction.

• Download in Adobe PDF.

Odometer Disclosure Statement – Whenever there is a transfer of ownership in regards to a motor vehicle, it is legally required for the seller to disclose the odometer reading of the vehicle. In some states, you can record this information to the title or within the bill of sale, in others, you are responsible to complete and sign an Odometer Disclosure Statement. This form will inquire certain details concerning the mileage and mandates that both parties sign the document.

• Download in Adobe PDF.

Proof of Identity – When purchasing a used vehicle in a private sale, it is important for the buyer to request a valid form of ID from the seller to guarantee that they are indeed the rightful owner. A driver’s license, state issued ID, or passport should be sufficient evidence to dispell any suspicion of fraudulent activity. (Be sure to match the name listed on the ID to the name recorded on the title/registration.)

Step 4 – Finalizing the Transaction

Now that both parties have come to an agreement and are satisfied with the preliminary measures, it is time to execute the transaction. The seller and buyer should meet at an agreed upon location and do the following actions:

• Sign the Necessary Paperwork – The seller must provide the signed-over title and a completed bill of sale. The bill of sale will then be signed by both individuals and a copy may be distributed to each party.
• Collect Payment – The buyer must provide the form of payment that was agreed upon prior to the closing. Once the seller receives the payment, they may present the new owner with the vehicle’s keys to conclude the transaction. (Sales tax must be paid to the DMV during the transfer of title and registration.)

Step 5 – Registering your Recently Purchased Vehicle

The new owner must now bring the vehicle in for registration. You are typically allotted a certain period of time from the date of sale to register your vehicle. Visit your local vehicle registration office and be prepared with the following documentation (requisites vary from state to state):

• Bill of Sale – Completed and signed by both the seller and buyer.
• Certificate of Title – The original title signed by the previous owner.
• Proof of Auto Insurance – The individual registering must furnish evidence of an active car insurance policy in his or her name.
• Photo ID – Be prepared to present a valid form of photo identification (driver’s license, state ID, passport, etc.)
• Odometer Disclosure Statement – Required in certain states, otherwise record the mileage on title or bill of sale.
• Emissions Test – Only if it legally required within the state you live.
• Payment – Bring the necessary funds to appease any fees associated with registration, titling, and/or taxes.

DMV Locations by State

Defining the Terminology

When creating a bill of sale document, you must know the terms that are being used within the agreement. Listed below are the common words/phrases associated with the bill of sale form:

• Seller (Transferor) – Person(s) releasing their rights and transferring ownership of the property to the buyer.
• Buyer/Purchaser (Transferee) – Individual(s) who is buying the property and obtaining the title from the seller.
• VIN (Vehicle Identification Number) – Is a sequence of 17 numbers and letters that can identify a specific vehicle. Every vehicle contains its own unique VIN that can determine the automobile’s characteristics, manufacturer, history, and other important details. (The location of the VIN varies depending on the vehicle.)
• As Is – This term indicates the vehicle is being purchased in its present condition and the buyer accepts any defects the property may have. By incorporating this into the bill of sale, the seller protects themselves from any claims of not disclosing pertinent information involving damages to the property.
• Gift – If the property is being transferred free of charge, it is being gifted.
• Sum of (In the consideration of) – This phrase indicates what price the property is being sold for.
• Notary Public – Is a public official who is authorized to review and certify specific legal documents.
• Trade-in – Is a practice involving the exchange of property towards another piece of property. This can be an equal exchange or partially go towards the price of the desired property. (Typically executed in the automobile industry.)

Frequently Asked Questions (FAQ)

Is a Bill of Sale legally required to sell or purchase a motor vehicle?

It all depends on which state the transaction is taking place in. Some states stipulate that it is mandatory to execute a bill of sale, whereas others do not. However, it is always a good idea to fulfill this agreement regardless as it can be a worthwhile document to have on file.

Who should be supplying the Bill of Sale?

Traditionally, the seller would supply the form upon the exchange of property. That being said, it would be wise for the buyer to bring their own copy in case the seller forgot to bring one or they are not interested in completing the agreement for their own personal records.

Do both parties need to sign the document?

The majority of the bill of sale forms require the signatures of all participating individuals. Some states may only require the signature of the seller. It is recommended that both sides of the transaction sign the document if given the option.

Does the Bill of Sale have to be notarized?

Once again, this varies from state to state. Certain states request that the individuals taking part in the sale of an automobile sign the form while under the review of a notary public who may then ratify the contract. Even if a state does not enforce this rule, you may want to consider achieving this as it increases the validity of the document.

How to Write

Step 1 – Download the document in Adobe PDF or Microsoft Word (.docx).

Step 2 – Sale and Buyer/Seller Information – The first 2 sections of the form require that the participants insert the specified details regarding when and where the transaction is taking place and who is involved in the exchange. Fill in the blank spaces as followed:

• Date of the Transaction:
  • Enter the day, month, and last 2 digits of the year within the corresponding spaces.
• Location of the Sale:
  • Insert the name of the county and state in which the exchange is to occur.
• Transferor/Transferee Contact Info:
  • Provide the names and mailing addresses of both parties (seller & purchaser) involved in the transfer of property.

Step 3 – Transaction Specifics – The third section requests that you define the terms of the exchange. There are 3 available options:

• Monetary Payment:
  • This is the most common selection where the purchaser provides the necessary funds to cover the full cost of the vehicle. Enter the dollar amount of the purchase price within the designated area. (To avoid any type of fraud, it is suggested that the buyer and seller meet at an agreed-upon bank to transfer the money.)
• Trade-in:
  • If the seller agrees, the purchaser may transfer ownership of their vehicle in exchange for credit towards the sales price of the primary vehicle. Check the box and enter the additional dollar amount of money needed to cover the full selling price. Then, fill in the following required fields regarding the trade-in vehicle:
    • Make
    • Model
    • Year
    • Body Type
    • Color
    • Odometer Reading (in miles)
• Gift:
  • If the seller would like to transfer possession of the vehicle at no cost to the purchaser, check the indicated box and input the estimated value of the vehicle into the appropriate space.

Step 4 – Vehicle Description – Participants must identify the primary motor vehicle that is being transferred to the purchaser. To do so, navigate your way to section 4 of the bill of sale and insert the following details into the proper fields:

• Make
• Model
• Year
• Body Type
• Color
• Odometer Reading (in miles)
• VIN (Vehicle Identification Number)
• Check the first box if all the necessary taxes are included within the vehicle’s sales price.
• Check the second box if no taxes are included within the sales price.
• If applicable, insert any additional provisions regarding the exchange within the designated section.

Step 5 – Acknowledgment of Notary Public – Before the parties sign the document in the designated section, it is advised that all signatures be performed while under the review of a notary public. Even though some states may not require this action, it can be considered a good measure to take in order to strengthen the legitimacy of the agreement. The official possessing notarial power must complete the 2 assigned sections (one for the seller and one for the buyer) by filling in the following blanks:

• State in which the agreement is being certified.
• County
• Date (day, month, year)
• Name of the Seller/Buyer
• Notary Signature
• Date in which their commission expires.

Step 6 – Odometer Disclosure Statement – The last portion contained within the bill of sale is the “Odometer Disclosure Statement”. Here, the seller must provide the current mileage displayed on the vehicle’s odometer. Failure to do so or providing a false reading could result in a fine or even imprisonment. Enter the following information as follows:

• Name of the Seller(s)
• Mileage
• Check the first box if the seller declares that the odometer reading shows the total mileage in excess of its mechanical limitations.
• Check the second box if the seller declares that the odometer reading listed above is not the actual mileage.

After submitting the information above, both parties should provide their signatures and printed names on the proper lines below.

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