What does Bill of Sale mean?


A bill sale is easier to draft than most people realize. In fact, a bill of sale is an effective instrument when you need proof of sale. Essentially, a BoS proves the value of the item and its sale. Within a bill of sale, there are several elements that inform the details of the sale and ensure the legal transference of an item between two parties.

You can see a bill of sale as a mutual agreement between the buyer and the seller. Whether it’s vehicles, watercraft, or motorcycles, when there is a sale – there is bound to be a bill sale of sale document to record the transaction legally. A BoS also comes into play when a party buys animals, furniture, or personal property.

Bill of Sale: Legal document

The details within a bill of sale also help third parties avoid confusion concerning a transaction. In short, a BoS minimizes a possible disagreement between the buyer and the seller or anyone who may question a transaction’s transparency. Without a bill of sale, the buyer and the seller cannot secure a legal transfer of the valued item. It is crucial to draft a bill of sale document to make the transaction official and adhere to local and state laws.

In this post, you’ll learn about the basics of a BoS, the importance of a bill of sale, when a bill of receipt is used, and how to draft a bill of sale:

What does a Bill of Sale mean?

Technically, a bill of sale refers to a legal record in the form of a written document that highlights the details of a specific transaction. A BoS records the ownership transference of a short-term or fixed asset. In layman’s terms, a bill of sale highlights the exchange of an item for money.

It is customary for the seller to create a BoS. In fact, it is up to the seller to add all the relevant details of a transaction within a bill of sale. This legal record is crucial for both parties the buyer and the seller since it protects both the buyer and the seller in the event of a mutual or third-party disagreement.

Think of a BoS as evidence that notes all details and considerations related to a transaction. Ultimately, a bill of sale confirms the transfer of value and ownership of an item to the buyer. Contrary to what you may have heard, the mechanics and process of how a bill of sale works is straightforward.

Of course, if the transaction is complex – the bill of sale is bound to be complex. But in most cases, a BoS is simple and easier to understand for the buyer, the seller, and third parties. You can view a typical retail bill as the most common form of a BoS. It notes the goods purchased by the buyer at the agreed-upon price.

Practically, the future contract holders are delivered and shown as BoS or sale forms. You can exchange these delivery instruments or a BoS with the underlying asset. In retrospect, the key feature of a bill of sale is that it works as proof of sales and a sales receipt.

When you perform a transaction involving an expensive asset like an automobile or a personal property, a bill of sale ensures the completion of a transaction obtained by person selling “after” the sale.

An absolute Bill of Sale

A bill of sale divides into an absolute BoS and a conditional BoS.

Conditional Bill of Sale

Conditional is the most common type of bill of sale used to transfer personal assets based on specific conditions.

On the other hand, an absolute bill of sale represents security documents that work as evidence of transfers.

How to write a Bill of Sale?

Asset details

When drafting a bill of sale, find out the information it should contain. A typical BoS should include relevant details like the purchase date and full names and addresses of the buyer and the seller. It should also include the paid amount for transfers ownership, asset description, warranty clauses, and signatures of involved parties.

If you’re buying a property, note down all the details to draft this legal document. However, if you’re selling personal property, mention areas, location, and other relevant information in the bill of sale. Apart from real estate transactions, there are some products where you have to note the model, type, and ID number as details.

Collect transaction information 

The buyer and the seller are key players in a bill of sale. Therefore, collect the transaction information from the buyer and seller. If you draft a BoS with sufficient information about the seller and the buyer, you probably won’t have to deal with legal issues.

Once you have a notarized bill of sale based on accurately collected information, the disputed issue won’t get to court. Remember, a BoS could have multiple sellers and buyers. So, make sure to collect and note the information of all parties. But collecting and mentioning direct names, note the business names of involved parties.

Setting price

In order to write a bill of sale, you have to fill out crucial details and make the document purposeful. And part of the process is to include the price of the item or property. You can add the tax amount within the price and mention the item’s total cost and payment mode. After that, the buyer can pay via cash, promissory note, internet banking, or demand draft.

Check the accuracy of the drafted Bill of Sale

Naturally, you want to ensure your drafted bill of sale is error-free, which requires reviewing it one or two more times to address any inconsistencies. If there is unique information related to the transfer of ownership, mention it separately.

Again, make sure the details mentioned within a BoS are accurate to ensure there is no room for a potential conflict or violation of local or state laws. When collecting and adding information to a bill of sale, it is crucial to be transparent and use simple language to make the information understandable to all parties.

Note loan terms and conditions

If a loan is involved in the purchase of an asset, then make sure to include the terms and conditions of the loan. Highlight the accurate details of the lender, interest rate, monetary terms, and the loaned amount.

Sign the drafted Bill of Sale

Last but not least – make sure the seller and the buyer sign the drafted bill of sale. A signed and notarized bill of sale represents a mutual agreement between parties to transfer the ownership of an asset. Make sure the signs include a suitable date.

You can print out the BoS with an empty date and mention the dates on a printed document. Unlike notarization, you don’t need a witness to draft and execute a bill of sale. But it wouldn’t hurt to have someone close by who can validate a BoS to avoid future disputes.

When should a Bill of Sale be used?

  • A bill of sale comes into play when the seller needs to transfer the ownership of an item and highlight the asset’s value in a transaction.
  • Most states now mandate a BoS for the seller and buyer to prove their purchase and transfer of ownership.
  • Whether you want to buy a horse or a vehicle, a bill of sale is required.
  • Now, if you’re selling clothing items, it depends on whether or not you want to dedicate some time to draft a BoS. Most retailers use a bill of sale machines that draft and print the bill receipts in real-time.
  • From the perspective of the buyer, you should have a BoS at all costs. In many situations, when the retail sellers don’t provide the BoS, it is up to the buyers to ask for one.
  • Depending on different situations, the use of a bill of sale becomes paramount when:
  • You own a real estate property and want to sell it and need a proper record of the transaction details
  • You want to purchase a vehicle or a motorbike from a private seller and want to keep a legal record to showcase proof of transaction
  • When states mandate a signed and notarized bill of state for special cases like selling or buying branded livestock or transferring a title from the department of motor vehicles

Final thoughts

If you’re not sure whether or not you should get a bill of sale, get in touch with a law firm, a lawyer or a financial consultant. But if you’re buying an item of value – you will need a BoS to prove the transfer of ownership and maintain a legal record of the transaction.

Bill of sale is integral to ensure the purchase of an item is legal and does not invite disagreements related to the purchase. As a buyer, before you decide to sign the BoS, make sure to check whether or not it’s a legal transaction.

Also, there should be multiple copies of the bill of sale for the buyer and the seller to avoid potential fraud. In hindsight, a BoS is a crucial piece of a legal document when it comes to transferring, buying, or selling ownership of an item.

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On PandaDoc Notary public, it is a matter of scheduling an appointment and finding an online notary agent to move forward with the notarization process. Once you find an online notary agent and communicate, you can depend on that online notary agent to notarize documents.  

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Legally, you don’t have to – but it is a good idea to notarize your bill of sale through the PandaDoc Notary platform. 


Does a bill of sale have to be notarized?

Legally, you don’t have to notarize a bill of sale. But to avoid inconsistency and fraud and ensure transparency, it is standard practice to notarize a BoS. In fact, a notarized bill of sale helps the buyer and the seller avoid legal issues, scams, and fraud. Notarizing your BoS would make sure the ownership transfer is smooth.

Do you need a bill of sale if you have the title?

Despite the nature of a purchased item – you want to make it legal, and this is where a BoS gets important. For instance, if you made a major sale like a vehicle and possess the title – you will still need a bill of sale to make the transaction legal. In most purchases, a BoS document is required.  

How do you write a bill of sale for a car?

Drafting a vehicle’s BoS includes the date and time of the sale, car description, model number, and year. The seller also has to note the car’s selling price in the bill of sale. Similarly, the seller needs to mention whether or not a car is a partial gift. A vehicle BoS should also include warranty information, addresses, signatures, and full names of the seller and buyer.

How do you get a bill of sale?

Typically, you can get your bill of sale document from your local store, county tax office, or tax assessor. Remember, you can draft a BoS on your own. But when drafting a bill of sale, make sure to add full names, addresses, and other relevant details involving the buyer and the seller.