How Binding Is a Bill of Sale?
Most exchanges in ownership between two parties require completing a bill of sale to note the parties involved and the amount exchanged for the item in question. Though it is a legal contract, many are left wondering if it is binding and what rights they have in terms of canceling it. You may be surprised at your options, so read on to find out more.
What’s a Bill of Sale?
A bill of sale is a legal document used to show the sale of an item. It documents the change of ownership of an item, most often used in the sale of vehicles. This document secures the seller and the buyer, giving them proof of their purchase for the proper registration of the vehicle in question.
When Is It Usually Used?
Many states require the use of a bill of sale form when an owner chooses to sell their property privately. Most cases involve motor vehicles, but this is not the only case. There are also instances where individuals sell animals, tools, clothing, etc. Therefore, the bill of sale can take on the same role as a receipt, showing the item’s sales price.
Absolute vs. Conditional Bill of Sale
There are two types of bills of sale usually used when one person sells an item to the other. These are labeled as a conditional and absolute bill of sale. Each one is used in different circumstances when dealing with the changing of ownership of an item.
Absolute Bill of Sale
An absolute purchase is one that is signed and sealed. This type of acquisition means that the transaction is complete and that neither party needs to act further for the purchase to be finished. Most cases involve the buyer paying the price agreed upon by both parties upfront.
Conditional Bill of Sale
When the two parties involved in the buying and selling of an item agree to certain conditions, like payments in installments, continued service on vehicles, and so on, this is known as a purchase with conditions. In this type of transaction, both parties should create a conditional bill of sale, which outlines the agreed-upon requirements for completing the sale.
How to Make a Binding Bill of Sale?
So, what if you want to back out of a car deal after signing a bill of sale? Can you do it? It depends. First of all, you should think of this legal document as a contract that spells out the terms and conditions of the vehicle purchased. It isn’t very easy to back out of a deal, but it can be done.
Suppose the person purchasing the vehicle suddenly decides not to go through with the transaction after signing the document. This, however, is only possible if the individual has not started the titling. If not, buyers could have a large window of opportunity to overturn the sale and walk away from the deal.
Things to Consider Before Signing a Bill of Sale
Because a bill of sale can hold up as a legal contract for purchase, buyers should hold off on signing until they are sure they agree with the terms and want to buy the vehicle in question. In some cases, after signing paperwork, they will not have the right to back out and could be stuck in a bind if signing without thinking things through beforehand.
Some contracts may give the buyer the right to overturn their decision on a purchase within a set number of days. For example, if there is a clause giving the buyer a trial period to check the item’s condition by hiring an expert (e.g., a mechanic or veterinarian). No matter the case, the buyer should read the bill of sale form (especially conditional) over and make sure they understand the terms and agree to them.