How to Write a Bill of Sale: Requirements, Examples, and State Laws

A bill of sale is a legal document that records the transfer of ownership of personal property from a seller to a buyer. It serves as a receipt, a proof of ownership record, and in many cases a required document for registering or titling property with government agencies. Whether you are selling a used car, a boat, a horse, a piece of heavy equipment, or virtually any other item of significant value, a properly drafted bill of sale protects both parties and provides a clear legal record of the transaction.

In this guide, we cover what a bill of sale is and when you need one, the essential elements every bill of sale should include, special requirements for vehicles and other regulated property, notarization requirements, and how state laws vary. By the end, you will know exactly how to write a bill of sale that will be accepted by your state's DMV and hold up in any legal dispute.

What Is a Bill of Sale?

A bill of sale (sometimes called a purchase agreement or sales receipt) is a written record of the sale of personal property. Unlike real property (land and buildings), which transfers ownership through a deed, personal property transfers ownership through a bill of sale. The document typically identifies the property being sold, confirms the purchase price and payment terms, identifies the buyer and seller, and records the date of transfer.

A bill of sale is not the same as a title. For vehicles, watercraft, and some other types of property, the state issues a title document that officially records legal ownership. The bill of sale records the transaction; the title (once transferred) confirms the new ownership in the government's records. Both documents are typically required to complete a vehicle transfer.

When Do You Need a Bill of Sale?

A bill of sale is required or strongly recommended in the following situations. For vehicle sales, most states require a bill of sale to transfer registration and obtain a new title. Even in states where it is not strictly required, a bill of sale protects the seller from liability for traffic violations or accidents that occur after the sale. For boats and watercraft, the Coast Guard and most state boating agencies require a bill of sale for title transfers. For firearms, a bill of sale creates a paper record of the transfer. For large personal property sales — horses, livestock, heavy machinery, jewelry, antiques, or business equipment — a bill of sale documents the transaction and may be needed for insurance, tax, or dispute resolution purposes.

Essential Elements of a Bill of Sale

1. Date of Sale

The date the transaction is completed and ownership transfers. This date is important for tax purposes (it determines which tax year the sale falls in), for liability purposes (it establishes when the seller's liability for the property ended), and for registration purposes (many states require registration within a specific number of days after the sale date).

2. Identification of the Parties

Full legal names and addresses of both the seller and the buyer. For vehicle sales, this should match the information on the parties' driver's licenses. Some states also require driver's license numbers, particularly for vehicle sales. If a business (rather than an individual) is the buyer or seller, include the business name, business address, and the name and title of the authorized representative signing the document.

3. Description of the Property

Describe the item being sold in enough detail to identify it uniquely. For a vehicle, include: year, make, model, color, Vehicle Identification Number (VIN), current odometer reading, and any relevant accessories or modifications included in the sale. For a boat, include: hull identification number (HIN), year, make, model, length, and the trailer or motor if included. For general personal property, provide a description specific enough that both parties agree on exactly what was sold.

4. Purchase Price and Payment Terms

State the total purchase price. If the full amount was paid at closing, note that payment was received in full. If there is an installment payment arrangement, specify the payment schedule, interest rate (if any), and what happens in the event of default. For gift transactions (where the property transfers for $0 or $1), note that the property is a gift to avoid any implication that the low price reflects undisclosed problems with the property.

5. "As-Is" or Warranty Clause

Most private party sales of used property are sold "as-is," meaning the seller makes no warranties about the condition of the item. Including an explicit "as-is" clause — for example, "Seller makes no representations or warranties, express or implied, regarding the condition of the property, and Buyer accepts the property in its present condition" — protects the seller from claims that the property was not as represented.

6. Clear Title Representation

The seller should represent that they have clear, unencumbered title to the property and the right to sell it — meaning there are no liens, loans, or other claims against it. This is particularly important for vehicles, where a lien on the title (from a car loan) must be released before ownership can transfer. If there is an outstanding loan on the vehicle, the lienholder must be paid off and the lien released, typically at closing, before the title can be transferred to the buyer.

7. Signatures

Both the buyer and the seller must sign the bill of sale for it to be binding. For vehicle sales in most states, signatures must also be notarized. Some states require the signature of a witness in addition to notarization. Make sure both parties keep a copy of the signed bill of sale.

When Is Notarization Required?

Notarization requirements for bills of sale vary by state and by property type. For vehicle sales, the following states require a notarized bill of sale or notarized title: Louisiana, Maryland, Montana, Nebraska, New Hampshire, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, West Virginia, and Wyoming. Other states strongly recommend notarization even if not strictly required, as it provides additional protection against fraud claims.

Even in states where notarization is not required, having the bill of sale notarized is generally a good idea for high-value transactions. A notarized signature is harder to repudiate — the notary verifies the signer's identity and confirms that the signature is genuine — which strengthens the document's value as evidence in any future dispute.

Vehicle Bill of Sale: State-Specific Requirements

Vehicle bills of sale are the most heavily regulated category. California uses a combined "Bill of Sale/Smog Transfer" form and requires a smog certificate for most vehicle sales. In Texas, the Texas Department of Motor Vehicles provides a standard Form 130-U (Application for Texas Title) that serves as the bill of sale for vehicle transfers. In Florida, the seller must provide an odometer disclosure statement for vehicles under 10 years old and under 16,000 pounds. Always check your state DMV's website for the current required forms and procedures before completing a vehicle sale.

Boat and Watercraft Bill of Sale

For boats, the bill of sale should include the hull identification number (HIN), the make, model, year, length, and hull material. If an engine or trailer is included in the sale, provide the engine's make, model, serial number, and horsepower, and the trailer's VIN. Boats that are federally documented transfer ownership through a U.S. Coast Guard bill of sale in addition to any state requirements.

Business Bill of Sale

A business bill of sale documents the transfer of a business's assets — equipment, inventory, goodwill, trade name, customer lists, and intellectual property — from the seller to the buyer. It is distinct from a business purchase agreement, though both documents are typically used in a business sale. The bill of sale specifically records what assets are transferred and at what aggregate price.

Record Keeping and Tax Implications

Both buyers and sellers should retain copies of bills of sale indefinitely. For sellers, the bill of sale documents the sale price, which may be needed to calculate capital gains or losses for tax purposes. For buyers, it documents the cost basis of the property, which is important when the property is later sold. For businesses, bills of sale for equipment and other assets support depreciation deductions on tax returns.

1. Always use the current form required by your state's DMV or relevant agency — forms and requirements change.
2. Complete all fields. Incomplete bills of sale are frequently rejected by DMV offices and can delay registration.
3. Disclose known defects. Concealing known material defects that would affect a buyer's decision can expose the seller to fraud claims.
4. Pay sales tax: Many states collect sales tax on vehicle sales at the time of registration. Know your state's rate before closing.
5. Verify the VIN: Before purchasing a vehicle, run a VIN check to confirm the title is clean and the vehicle history is as represented.