A bill of sale is meant to protect both buyers and sellers by making it completely clear what everyone gets from a transaction. Bills of sale are legal documents that serve as agreements between buyers and sellers. They document the date of the sale, item price, item description, money received and warranty information. People commonly use a bill of sale when buying or selling used cars, guns, boats, dogs or other items of value.

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Here are some common bill of sale mistakes to avoid when you use a bill of sale to buy or sell something.

Not using a Bill of Sale

The biggest mistake is not using a bill of sale at all. Particularly when paying cash for an item, the absence of a bill of sale or receipt of any kind makes it difficult, if not impossible, to prove that you are the rightful owner. This can cause large hassles, especially when you try to register and insure a motor vehicle or watercraft, and the government agency or insurance company asks for a bill of sale.  

The bill of sale is an important legal document that helps prove that the property has changed hands. If you are the seller, not having this document makes it difficult to prove that the property no longer belongs to you, which is especially problematic if the item (e.g., a gun or dog) causes injury to others after you have sold it.

Omitting Important Information

A bill of sale is most useful when it contains all essential details.  For example, the names and contact information of all people involved in the transaction should be included so that there is no confusion about the identity and whereabouts of the responsible parties. Leaving out important names and addresses can later cause problems if you need to follow up on a warranty as a buyer, or prove to an official that you are no longer the owner of the item.

A bill of sale that thoroughly addresses the condition of the property offers greater protection. Omitting such a description can possibly cause problems for you as a seller, or leave you without any protection as a buyer. If the property is being sold "as is," then the seller has no responsibility to make any repairs or replace the item or its parts. If the seller does intend to offer a limited warranty, the terms should be outlined on the bill of sale, or accompany it in another document, as a protection for the buyer.        

One of the most important elements on a bill of sale is the signature of all buyers and sellers. Without signatures, the document may not be useful should you run into any legal issues.

Inaccurate Information on a Bill of Sale

The accuracy of the information on the bill of sale is very important. Correct spellings of all names and contact information are essential for tracking down the right people. Listing an inaccurate car VIN # or odometer reading may make it difficult to register the car at the DMV.
The wrong transaction date on a document can also cause legal hassles if you need to defend yourself against accusations that the item later caused injury to others. Closely reviewing all information on the bill of sale is essential.   

Walking Away Without a Copy

The final step in a transaction is obtaining a copy of the bill of sale. Stepping away from a deal without it can put you at risk. For example, a seller might promise to mail you a copy after you have paid for the item, which can put you in a vulnerable position, particularly if you have paid cash and have no receipt to prove it. Insisting on a copy of the bill of sale at the time of the sale protects everyone involved.

An accurate and thorough bill of sale -- complete with contact information of all buyers and sellers, clear and accurate item descriptions, warranty explanations and all signatures -- reduces the possibility of hassles down the line.    
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Get started Start Your Bill of Sale Answer a few questions. We'll take care of the rest.

Get started Start Your Bill of Sale Answer a few questions. We'll take care of the rest.