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4 Reasons to Use a Bill of Sale in a Private Transaction
Many people opt to sell or buy vehicles, aircraft, watercraft, motorcycles, and other items of value not via a dealer but in a private transaction. The benefits of such an approach are numerous, giving the parties more freedom to bargain the terms and price and save a reasonable share of the cost by not paying to a dealer.
However, as with any private deal, the risks of fraud or abuse are plenty. The solution is to have a bill of sale to stipulate all deal terms and secure each party's rights. If you are planning such a private deal, consider using online bill of sale templates like FormsPal forms available free of charge to make the process of deal completion hassle-free.
What Is a Bill of Sale?
A bill of sale is a document that you can complete in handwriting or download a printable form to fill out the blanks with required information about the item sold. The fields depend on the item you're selling or buying. For instance, if the deal relates to a vehicle, the bill of sale should include the following information:
The type of vehicle you're selling (whether it is a passenger car, a motorcycle, or a boat)
The year of vehicle's manufacture
The item's make and model
Odometer reading results at the date of ownership transfer
The engine's serial number
VIN and vehicle registration data
Other mandatory parts of any bill of sale include the date of purchase, the seller's and buyer's identifying information (e.g., name, address, and contact data), the price paid for the object, a detailed description of the item, and representations or warranties coming with them.
Reasons to Have a Bill of Sale
To complete or not to complete a bill of sale? Who needs such a document, and why should you bother? Here are the four reasons for considering the inclusion of a bill of sale in your documentation package.
Registration of a Private Sale
Completing the change of vehicle's ownership transfer via a private deal is legitimate in the USA, so you're sure not to have any legal trouble with such a transaction. The only thing you need to do is report the sale/purchase and pay all applicable taxes.
However, adding a bill of sale to the transaction documents might come in handy as you document all the data about the deal in writing, confirming its validity with both the seller's and buyer's signatures. If you have such a document, you will always be able to prove the taxable amount to your local agency and double-check the vehicle's characteristics at the moment of sale (needed if your buyer has some complaints about the item's condition after the purchase).
Sale in the "As-Is" Condition
We've already touched upon this issue a bit in the previous section, and here is a more detailed account. When you complete a bill of sale and have your buyer sign it, this means that you both agree on the transfer of the vehicle's ownership in the vehicle's as-is condition. This principle means that your buyer accepts the vehicle's current state and does not expect any maintenance, repair, or warranty coverage on your part. This point is vital in the deal's negotiation as some buyers might miss some essential drawbacks of used items, remaining disappointed with the deal after its conclusion.
Official Transfer of Ownership
Another vital aspect of completing a bill of sale is the official transfer of ownership from one person to another. While most states do not require bills of sale as mandatory documentation for the organization of private sales, vehicles without a title have no other documents to prove the change of ownership except for a bill of sale.
Besides, you save yourself from any legal trouble in which your former vehicle can be involved if you complete a bill of sale with the buyer. From the moment of signing this document, you are no longer the item's owner, and even if the new owner gets into a car crash or some other trouble involving the vehicle, you won't be affected.
Every item of value has to be registered officially, with its price, condition, and current ownership known to the state agencies so that they can locate its owner and perform an evaluation in case of need. The bill of sale you complete with the previous owner of your new property codifies the chain of its ownership in writing so that ownership can be proven in court in case such a need arises. The same will occur once you sell the item to another person, stipulating the change of ownership in a similar document for taxation and reporting purposes.
This article does not necessarily reflect the opinions of the editors or the management of EconoTimes