Bill of Sale
Typically a short and succinct document, a Bill of Sale pertains to buying and selling transactions involving items of value, although it is not used for real estate or real property transactions.
Perhaps the most significant function the Bill of Sale serves is to seal and record the fact that a specific amount of money was, indeed, exchanged for a specific product or item. You should insist on the use of a Bill of Sale when you want to buy or sell an automobile, a boat or anything of value that involves transferring a title. More than just a simple receipt, a Bill of Sale serves several different purposes in a money transaction.
A Bill of Sale provides both buyer and seller with a comprehensive record of their transaction, which reflects the transaction’s
- amount of money exchanged
- description of the property,
- signatures confirming the terms of the sale
Although the first three of these are self-explanatory, the description section can make or break an effective Bill of Sale. Although an exhaustive description is not necessary, it is important to identify some kind of marker in your Bill of Sale for the item, such as the mileage accrued on a vehicle, whether the item is new, a serial or model number, or any other indicators that will distinguish this particular item and its current status.
For instance, if you were to sell your canoe and, later the buyer falsely claims it was supposed to be a fishing boat, the canoe’s serial number and brief description would prove that you, indeed, sold the buyer a canoe and not a fishing boat. Likewise, if you are purchasing a canoe, and the seller delivers to you a canoe-building kit, your Bill of Sale with a valid serial number will protect your purchase, and provide you with a legal document for support in court, should it come to that. The description section of the Bill of Sale document also allows the seller to specify whether he or she is selling the item in “as-is” condition, whether the item comes with extras, such as oars, and any other pertinent information.
Another function of this document is that it asks the owner of the property to “warrant,” or affirm that he or she actually has the right to sell it. Never underestimate the importance of that particular issue. The Bill of Sale should either assure you that there are no liens or other encumbrances against the item that would legally prevent the seller from making this transaction, or, should reflect the encumbrances in plain language, as well as how those issues will be resolved. For instance, if Mr. Fisher wants to sell you a canoe for $500, but he still owes $200 to the original owner for it, you would not want that original owner coming after you for his additional $200. You would want to make sure the seller notes on the Bill of Sale that all other unpaid costs for the canoe are his responsibility. Of course, these matters should be thoroughly discussed by both parties before any document is signed, and your attorney might advise you not to buy something that cannot be sold without these complications.
Finally, if a buyer is ever accused of illegally obtaining an item, a signed Bill of Sale should easily resolve the issue.
You will need to ascertain whether your state requires the signatures on a Bill of Sale to be notarized. It does not hurt to include the notary requirement in any case, since notarizing a signature only verifies that the person is actually who he says he is.
If you are uncertain about any aspect of your transaction, it is wise to seek the help of an attorney.