If you are buying a used car from a friend or other private person, you may need to get a bill of sale before you can register the vehicle with your local motor vehicle agency. A bill of sale for a car is a legal document that confirms the sale and transfer of possession of a motor vehicle. It usually contains the personal information of the buyer and seller, a description of the vehicle, and a statement of the price and terms of sale. Typically, the seller drafts the bill.
The contents of a formal bill of sale differ from state to state. Some states require a bill of sale for a car to be notarized; a few require that it include an odometer reading. Other states do not require it altogether. Even if your local DMV does not need a bill of sale to complete a title transfer or vehicle registration, you should get one to avoid future misunderstandings between you and the other person involved in the transaction.
What is the Purpose of a Bill of Sale?
A bill of sale for a car serves as evidence of a contract. It is proof that the original owner of a vehicle transferred possession to another person and received compensation for it. In this way, it acts as an invoice and a receipt for the people involved in the transaction. A seller can use a bill of sale to show that he or she sold the car without warranty, and a buyer can use it to prove that he or she made full payment to the seller in anticipation of receiving full ownership of the vehicle.
A bill of sale also acts as a record of the sale price and date of a vehicle. Both buyer and seller can use it for tax purposes, and either party can use it to show when responsibility for the vehicle changed. If the car incurs a traffic violation or gets involved in an accident, the seller can prove that he or she was no longer in possession of the vehicle and is therefore not liable. If the buyer needs to insure the vehicle, he or she can use the bill of sale to prove that he or she has ownership rights to the car.
What Does a Bill of Sale Contain?
- Typically, a bill of sale for a car includes the following information:
- Information about the parties to the contract. This includes the names, addresses, phone numbers, and driver license numbers of both the buyer and seller.
- A brief description of the automobile being sold. Most states require that the bill of sale identify the vehicle’s make, model, year, and identification number (VIN). Some states, such as Tennessee, require the seller to disclose the exact odometer reading of the vehicle at the time of sale and warrant that the reading reflects the actual mileage of the vehicle.
- The amount paid for the transfer of rights to the vehicle and the date of sale. If the vehicle is a gift or a partial gift, the bill of sale should reflect the fact and state the amount of consideration paid, if any.
- A description of the nature of the agreement between the buyer and seller. This description could include a statement that the seller acknowledges the sale of the car as described, and for the amount indicated, and certifies that the information provided in the bill is true to the best of his or her knowledge. It could also include a statement that the buyer accepts receipt of the bill of sale and understands that the vehicle is sold in as-is condition.
- The signatures of the buyer and seller.
Some states require a bill of sale for a motor vehicle be notarized. In this case, the buyer and seller have to verify their identities and sign the bill before a public notary. The notary then signs, dates, and applies his or her seal on the bill. Even if your state does not require a bill of sale to be notarized, having a notary act as a witness to the contract protects you, either as the buyer or seller.
Other states, such as Ohio, have a “promissory note” section on the formal bill of sale of a motor vehicle. The section must be completed if the buyer is paying for the car in installments. The promissory note contains the names of the buyer and seller, the principal purchase price, and the amount and number of monthly payments the buyer has to make to complete the purchase.
Where Do You Find a Bill of Sale Form?
You can get a bill of sale form from the website or local office of your state’s Department of Motor Vehicles. Some states require that residents use forms provided by the local motor agency, so check with your DMV to ascertain you have the right form. If your state does not require a bill of sale or does not specify what it should include, you can draft a simple proof of sale contract on a word processor or check online for a generic copy. You can also find a free, editable bill of sale template from the Microsoft Office Templates store.
A bill of sale for a car is a binding contract. You may have little to no legal recourse if you sign on the dotted line and discover later that you got the short end of the stick. If you are the buyer, review it carefully and look for inconsistencies between the terms of sale and what you agreed with the seller.
Pay particular attention to statutes regarding payment, warranty, delivery, and any special conditions. If the bill of sale stipulates that the car is being sold as-is, your signature on the contract means that you agree to accept the vehicle with any apparent or hidden defects it may have. It also means that you acknowledge that the seller does not extend you any warranty coverage. If the engine fails a few blocks from the seller’s garage, the seller is under no obligation to take back the car or pay for repairs. Consider bringing a professional mechanic with you to inspect the car if you are going to buy it in as-is condition.
Keep in mind that a bill of sale is not proof of ownership of a vehicle. To assume full ownership, you need to have title to the car, and it should be free and clear of liens. If the car you are buying was financed, whoever is servicing the loan holds the title to the car until the loan is cleared. Either you or the seller must pay off the lien before you can get a new title from a motor vehicle agency.
Get a Copy
Both the buyer and seller should keep signed copies of the bill of sale for their records. If either party initiates legal proceedings that involve the negotiation or sale of the car, both parties will need a record of the transaction to prove their case. It goes without saying that both buyer and seller should verify all signed copies are identical. If you are the buyer, keep your copy with the title of the vehicle. You may need both documents for registration and licensing purposes.