A Bill of sale is a legal document created on the sale or the transfer of possession of things like a car, boat, furniture, computer, or other personal possessions. The person who sells the product is known as the vendor or the seller, and the person who buys the product is called the purchaser. Bills of sale are also created to purchase or sell some form of intellectual property like a list of clients or a website. The buyer receives the bill of sale from the seller or the owner, and it generally includes the names of buyer and seller, the price paid for the purchase of a product, the mode of payment used, and the details of the product being sold. A bill of sale PDF form can have various lawful terminology depending on the complexity of the transaction.
Bill of Sale Types
There are basically two types of bills of sale:
- Absolute: An absolute bill of sale means that the transfer of non-tangible or tangible products is complete, and there are no due payments. The transaction is likely to close with complete payments. It is conditional for the sale of non-movable and movable products.
- Conditional: A conditional bill of sale is generally used in various property matters where the seller requests collateral from the buyer until the time of complete payment. The non-payment of the overdue amount gives the seller the power to claim complete ownership over collateral.
Preparing a Bill of Sale
It takes no more than five minutes to prepare a fully customized bill of sale with a PDF form. However, there are some important steps that you need to follow in preparing one and in avoiding some common pitfalls. There are four major types of bill of sale forms based on the property sold: boat, auto, business, and personal. The internet has made it possible to avail of these forms for free. A bill of sale can easily be prepared by following the steps mentioned below:
- Find a bill of sale pdf and\or download it.
- Open the form that you have downloaded and\or get a print of the form.
- Fill in all the blanks by entering the correct information.
The Contents of a Bill of Sale Form
A typical bill of sale form is provided to the purchaser by the seller and describes several points depending on the situation. A bill of sale will consist of the:
- names of the purchaser and the vendor;
- complete list of products sold;
- mode of payment used;
- price of the products sold;
- some other legal terms according to the complexity of the transaction.
Other provisions can be listed in a bill of sales form and include the terms explaining the condition of the sold equipment. Warranty provisions proving the legal ownership of the seller and the working condition of the products being sold can also be included in the bill of sales.
When some other individual claims the legal ownership of the product mentioned in the bill of sale, the warranty provisions of the document would offer the buyer certain legal rights to claim against the seller. If the products mentioned on the bill of sale get damaged or do not work as claimed, the warranty provisions might also offer certain legal rights to the purchaser. It is vital to keep in mind that getting a bill of sale from the vendor or the seller does not guarantee that the vendor possesses legal ownership of the products mentioned in the bill of sale. Speaking technically, an individual does not have the right to sell anything that they might not own.
Common Hitches and their Consequences
When preparing a bill of sale, you need to be completely aware of some common hitches and the consequences that they might have. Some of them have been highlighted below:
- Making use of a form downloaded from a dubious website. Some forms might contain certain errors and miss some of the crucial information.
- Making use of a handwritten bill of sale. Such forms can also contain errors, as you cannot be sure if the person who created them is versed in this document.
- Missing important points like details and description of the product being sold. Having a complete description of the product sold is essential.
These are the three major pitfalls that need to be avoided. This can eventually help both the buyers and the sellers in avoiding expenses and headaches as well. Some examples that can bring these problems in perfect light have been provided below:
- If a buyer is completely unsatisfied with their purchase because the product they received is not the same as described, a bill of sale can be of good use in this situation. A proper bill of sale that contains the product condition would resolve this issue.
- Making use of an incorrect form that does not describe or carry important information. The buyer might face problems in the future when they try to sell the product that was bought. This is because an incomplete bill of sale might lack the vehicle's VIN or the Hull number, which is the boat identification number.
The best way to protect yourself when selling a tangible item with a bill of sale is to have it notarized. The seller and purchaser must be present and sign the document in front of the notary public, which will protect both parties. This is a good business practice no matter what business you’re in. The company I work for offers loans with bad credit, and while we don’t notarize loan documents, each application goes through an official review process to ensure legitimacy. - Steven Bowmen.
Is it Mandatory to Use a Professionally Prepared Bill of Sale?
Yes, it is imperative to make use of a professionally prepared bill of sale. Preparing a custom bill of sale might cost a few dollars, but these provide proper legal protection to the sellers and the buyers.
Suppose you are purchasing a particular business, and as an important part of this purchase, you are buying all the related equipment like chairs, furniture, office supplies, and inventory. In that case, you should request a bill of sale agreement from the seller.
Getting a bill of sale from the seller is essential because this helps prevent the seller from claiming the ownership of the assets listed on the bill of sale document anytime in the future.
A bill of sale works as a written record or a receipt of a particular transaction and any payments done. It is similar to a receipt that people get from cash counters when they buy products at a convenience or a retail store. However, there is a slight difference between a sales receipt and a bill of sale. The latter might also contain other legal terms regarding the purchase that are not usually present in receipts.