What Is a Bill of Sale?

A bill of sale is the contract that's used most often for a car or other goods are bought and sold.

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Bills of sale have been used for centuries, when people have bought certain types of goods -- including horses, dogs, boats, or cars. A bill of sale is a record of a sale, stating that an item was sold by a specific seller on a specific date, at a specific place, and for a specific amount of money or other valuable property.

The bill of sale is a hybrid legal document with two purposes: it confirms transfer of title to (ownership of) the property and, in doing so, serves as evidence of a contract. Because it is commonly used for official purposes -- to register a car or a boat, for example -- a bill of sale may have to conform to state regulations. For example, many states require that a vehicle bill of sale include an odometer reading; some states require it to be notarized. Both parties can sign a bill of sale but, in many instances, only the seller needs to sign it.

Things can get complicated when a bill of sale is provided as security for a loan. For example, if someone pledges a car as collateral for a loan, the lender might require a bill of sale for the car, to become effective only if the borrower defaults on the loan.

A bill of sale can also be used as an element of a loan. For example, if you're buying a car using financing (installment payments), the complete agreement can be framed as a bill of sale, although technically the transfer of title might not happen until all payments required under the loan are made. State laws often regulate loan/bill of sale combinations because some sellers or lenders may abuse the practices described above.

A bill of sale can also include warranties (promises and assurances as to the condition or history of the item).

For a bill of sale for selling a car or truck, see Nolo's most popular bills of sale form, Motor Vehicle Bill of Sale.

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