Who keeps the bill of sale?
Both the buyer and the seller; that’s who keeps bill of sale documentation.
It’s a legal document designed to protect those involved in a transaction.
It’s proof that ownership of personal property has transferred from seller to buyer.
Why do I need a bill of sale?
What’s the purpose of bill of sale retention?
It prevents disagreement between the buyer and the seller. Disputes are unlikely when agreements are written in black and white.
A buyer can use it as proof of ownership or proof of purchase of the property.
It’s useful for tax purposes. Additionally, a bill of sale is helpful when writing a will.
For the seller, it’s also useful.
Again, there may be tax implications with the transaction. In the event of a warranty dispute, the bill of sale may even be needed in court.
Imagine the case of a purchase of a used car.
The new owner may maintain that the odometer reading is incorrect. The bill of sale could show that claim is false.
The requirements of a bill of sale can vary depending on your jurisdiction.
Things are made easier by using one of these state-by-state bill of sale templates.
Typically, a bill of sale will include the following information:
- Date of the sale
- Contact information of both parties (seller and buyer’s names, etc.)
- Purchase price
- A statement guaranteeing that no other party has any claim to the property
- Warranty information
- Signatures of the buyer, seller, and notary public.
In specific cases there may be other information.
With a vehicle bill of sale, for example, it may include the vehicle identification number. For transactions with a business, sales tax data is included.
When do you need a bill of sale?
There are some situations when there’s a legal requirement to keep a bill of sale.
State law may mandate that you need one, usually in the case of large purchases.
This is often for registering the property with a government body, such as with vehicle registration at the Department of Motor Vehicles (DMV).
The following is a list of items, the sale of which may require a bill of sale.
This isn’t an exhaustive list and you should always seek legal advice before a large transaction:
- Motor vehicles
- Large furniture items
When it comes to smaller transactions, a bill of sale may still be a good idea.
As a buyer, it helps reinforce your right to ownership. Even as a private seller, it’s a useful record.
There are other transactions when a bill of sale isn’t needed.
Real estate is covered by other legal documentation, eliminating the need for a bill of sale. It isn’t a requirement in the purchase of services, such as business consultancy.
Who keeps the original bill of sale?
Let’s look at the question of who keeps the bill of sale when selling a car.
The buyer should keep the original bill of sale.
It’s needed for registering the car that’s changed hands at the DMV and will contain details of the warranty if something goes awry.
The seller should retain a copy of the original. It’s a reminder of their commitments.
If there’s any dispute, it’s legally documented evidence for defending a claim. It may also be needed for tax purposes.
Does a bill of sale need to be signed?
There’s no requirement for all bills of sale to be signed by both buyer and seller in most states. However, it is required in the case of motor vehicles in every US state.
If it’s not signed, it can’t be used as proof of contract.
It’s still a record of other information, such as the sale price and the date of transfer of ownership.
An unsigned bill of sale is a significantly weaker legal document.
A seller can’t force a buyer to sign. Their only recourse would be to abandon the transaction.
Does a bill of sale have to be notarized? Once again, this is not a legal requirement in most states but there are exceptions.
For example, a notary public needs to sign a bill of sale for motor vehicles in six states:
- New Hampshire
- West Virginia
Even when it’s not required, notarization of a bill of sale makes it a more robust legal document.
Bill of sale vs sales contract: What’s the difference?
A bill of sale isn’t the same as a sales contract.
A sales contract is drawn up and signed before a transaction.
It lays out the terms of the transaction before buyer and seller come to a final agreement.
A bill of sale is proof of transfer of ownership.
It gives exact details of the property that is sold. It may also contain details such as, with a car, an odometer disclosure statement.
A completed bill of sale guarantees that no one else has a valid legal claim to the property.
Safeguard your purchase with a valid bill of sale
Now you know who keeps bill of sale forms.
In vehicle sales, livestock trades, or any large purchase, you often need a bill of sale.
It’s a more useful legal document when signed and notarized.
It gives you an extra layer of protection so you can transact with confidence.
PandaDoc makes all this easier with eSign functionality.
Also, with state-approved Remote Online Notarization (RON), PandaDoc can help you ensure your bill of sale is useful and legal.