What Is a Bill of Sale?

When purchasing an item, buyers should obtain proof of purchase. While most institutions provide a receipt of some sort, private owners must opt for legal documentation, one found with a bill of sale. This legal document outlines all of the details involving the sale, including information about current and future owners and the items that will change from one owner to another.

What’s a Bill of Sale?

When two parties take part in a transaction where a property is passed from one person to another, it requires documentation. This legal documentation serves to protect the buyer and the seller, showing that their property is now legally owned by another person. With a bill of sale template, all parties have a way to prove the transaction and the paid sum.

While the buyer can suggest that the seller create one, in most cases, the buyer is responsible for creating the document, drawing it up according to the terms discussed previous to the purchase. A bill of sale comes in handy in case there is a discrepancy. Both parties can look to the terms lined out in the receipt to clear up all misunderstandings.

When You Should and Shouldn’t Use It

A bill of sale involves an item that is changing ownership. Therefore, most cases involve an item that is sold for a price agreed upon between the two parties. However, not all sales require a bill of sale. Many things that pose little to no risk for the buyer will make do without a receipt. This could be used clothing, furniture, or other items that the buyer has no intent to return. In these circumstances, the buyer usually accepts the item “as-is.”

This document is best used with items where the buyer could face liability if there are illegal or harmful actions. For example, both vehicles and firearms require a bill of sale, as both should be registered correctly in the owner’s name. In most cases, it is up to the seller and buyer whether or not they wish to draw up a legal sales confirmation.

What Are Its Basic Elements?

In its most basic form, a bill of sale includes information useful for selling an item and all of the parties involved. It includes:

Before creating any legal document that verifies the passing of ownership of an item, all parties are recommended to consult the legislation in their area, ensuring they understand the requirements for signatures and all of the necessary information needed to create legal documentation.

What Are Its Types?

There are several types of bill of sale documents, each one tailored to suit buyers of different products in different ways. The types are:

Quitclaim Bill of Sale

In this type of document, ownership is transferred from one party to another. One common issue that comes with a quitclaim bill of sale is the legitimacy of ownership and the doubt that the current owner has the right to pass over the property. There is no need to warranty the title and the item, which could cause issues for the buyer later on down the line. It is recommended to avoid property purchases with this type of documentation.

Vehicle Bill of Sale

A vehicle bill of sale is used when one party sells their motor vehicle to another. Not all states require a document of this kind when a buyer purchases a vehicle; however, some do. It is needed for registration in some states and requested by the Department of Motor Vehicles in the state where it will be registered. While a document that shows the transaction details is useable in some circumstances, it does not count to prove ownership. The new buyer will need to obtain the title and add their signature to verify the actual ownership.

Absolute Vs. Conditional Bill of Sale

When a buyer and seller are discussing terms, they should be aware of two separate bill of sale types they can use. One is an absolute bill of sale, which states that the document’s terms were completed and the transaction is over. In this case, the buyer generally pays for the item outright and takes immediate possession of the item. In a conditional bill of sale, the buyer and seller agree to conditions (such as a payment plan) that must be followed to complete the transaction.

What Are the Key Terms Usually Used in This Form?

In this form, both buyer and seller should familiarize themselves with the following related terms


A liability is something that a person owes. This is often an amount of money that should go to the seller, completing the purchase and declaring the full ownership of the item by the buyer.

Escrow Agent

This is a person who takes on sole responsibility for transferring property from one person to another. This type of agent is most common in situations where real estate is involved.


It happens when a claim is filed concerning a property. Under the terms outlined in an encumbrance, the property in question cannot be passed from one owner to another.


A lien is a right for a company or an individual to keep possession of an item or property that belongs to another person until the terms (usually a debt owed) are met.


In some cases, the bill of sale will include a warranty. It is a guarantee from the seller of some sort, stating that the seller will replace faulty parts or that, if something goes wrong, they will take responsibility. Warranties generally last for a short period but can span to longer terms depending on the item.