Bill of Sale: What It Must Include and When You Actually Need One
Two pages of nothing, until the buyer calls six weeks later about the transmission. Then it is the only thing between you and their repair bill.
Short answer
A bill of sale is a written record that named property passed from a named seller to a named buyer, on a stated date, for a stated price. It documents a transfer that has already happened. It proves what was sold and on what terms — but for titled property like a car or a boat, it is not the thing that transfers ownership. The title and the state registry do that.
When you actually need one
For a $40 bookshelf, you do not. The threshold is not really the price — it is whether any of these is true:
- The property is titled or registered. Vehicles, motorcycles, trailers, boats, aircraft, and in some states firearms and livestock. The registry will ask for proof of the sale.
- Sales tax is assessed on the sale price. The bill of sale is what establishes the price, and a missing one often means the tax authority uses book value instead.
- The buyer might come back. Anything mechanical, anything expensive, anything sold to someone you do not know. The AS IS clause exists for exactly this conversation.
- The item could be reported stolen or encumbered. A bill of sale showing an arm's-length purchase from a named seller is the buyer's evidence of good faith.
- The business needs the record. Asset purchases, equipment disposals, and anything that has to reconcile to a fixed-asset register or a tax return.
And one non-reason: a bill of sale does not need to be long. A complete one fits on a page. Length is not what makes it work — specificity is.
What goes in it
| Element | What it must contain | Failure mode |
|---|---|---|
| Parties | Full legal names and addresses of seller and buyer. For a business, the registered entity name. | A first name and a phone number identifies nobody the DMV or a court can find. |
| Date of sale | The date possession and ownership actually changed hands. | Liability for a crash, a ticket or a toll usually turns on this date. |
| Property description | Year, make, model, body style, color, and full VIN or serial number. For other goods, quantity and identifying marks. | A description that fits two objects proves nothing about either. |
| Price and payment | Amount in words and figures, method of payment, and whether it was paid in full at signing. | Sales tax is often assessed on book value when the price is not documented. |
| Warranty of title | That the seller owns it, has the right to sell it, and it is free of liens except any disclosed. | This is the promise the buyer most needs, and the one most home-made forms omit. |
| Condition and disclaimer | Conspicuous "AS IS, WHERE IS", with the word "merchantability" if the implied warranty is being excluded. | A disclaimer that is not conspicuous can be ineffective, leaving the warranties in place. |
| Odometer disclosure | Mileage plus an election among actual / exceeds mechanical limits / not actual mileage. | Required by federal law for non-exempt vehicles, and misstating it is odometer fraud. |
| Signatures | Both parties, with printed names and dates. A notary block whether or not your state requires it. | An unsigned buyer means no proof the buyer accepted the AS IS terms. |
Why the AS IS clause is in capital letters
Under the Uniform Commercial Code, a sale of goods carries implied warranties unless they are excluded. The implied warranty of merchantability — broadly, that the goods are fit for the ordinary purposes they are used for — arises under § 2-314 when the seller is a merchant dealing in goods of that kind. The implied warranty of fitness for a particular purpose arises when the seller knows the buyer's particular purpose and the buyer is relying on the seller to select something suitable.
Section 2-316 sets the rules for getting rid of them, and the rules have teeth. To exclude merchantability, the language must mention merchantability, and in a writing it must be conspicuous. To exclude fitness, the exclusion must be in writing and conspicuous. Separately, § 2-316(3)(a) says expressions like "as is" or "with all faults" can exclude implied warranties where they make plain there is no implied warranty.
Conspicuous means a reasonable person ought to have noticed it — which is why the convention is bold capitals in a paragraph of their own, rather than the same nine-point type as everything else. A disclaimer that fails the conspicuousness test does not fail quietly. It leaves the implied warranties in force, which is precisely the outcome the clause was drafted to prevent.
Two qualifications. If you are a private individual selling your own car, you are not a merchant in cars, so the merchantability warranty probably was not implied in the first place — but the clause is still worth having, because it forecloses the argument and covers fitness. And if you are a dealer selling to a consumer, an AS IS clause is not the end of the analysis: the FTC's Used Car Rule requires a Buyers Guide, several states restrict or prohibit as-is sales of used vehicles to consumers, and a written disclaimer does not override a state consumer-protection statute.
The odometer disclosure, and when it is not required
Federal law makes odometer disclosure a requirement of transfer for most vehicles, and the exemption rule changed in a way many templates have not caught up with. Under 49 CFR § 580.17:
- A vehicle from model year 2010 or earlier is exempt once transferred at least ten years after January 1 of its model year. Every such vehicle is now past that point.
- A vehicle from model year 2011 or later is exempt only twenty years after January 1 of its model year. A 2011 vehicle therefore becomes exempt in 2031 — not in 2021, as the old ten-year rule would have had it.
In practice, if you are selling anything from 2011 onwards, assume the disclosure is required. It normally belongs on the title document itself, with the bill of sale carrying a matching statement. Give the mileage as it reads and elect one of the three states: that it reflects the actual mileage, that it exceeds the odometer's mechanical limits, or that it is not the actual mileage — the last of which must carry an odometer discrepancy warning. Misstating mileage is odometer fraud, which is a federal offense, and "I just wrote what the seller told me" is not a defense worth relying on.
Draft a bill of sale with the disclaimers in place
Describe what you are selling and to whom. The Agreedly generator drafts a complete bill of sale — warranty of title, a conspicuous AS IS clause, the odometer election where it applies, and a notary block.
Draft a bill of sale →Bill of sale, purchase agreement, or title
These three get used interchangeably and they do different jobs. Getting them confused is how a sale ends with a buyer who cannot register the car and a seller who is still on the hook for it.
| Document | What it does | When you need it |
|---|---|---|
| Purchase agreement | Promises a future sale on stated terms — deposit, conditions, closing date, what happens if either side walks. | When money and goods do not change hands on the same day, or the sale depends on an inspection or financing. |
| Bill of sale | Records that the transfer has happened, on stated terms, and disclaims warranties. | At the moment of the handover. It is the receipt with legal effect. |
| Certificate of title | The state's record of legal ownership. Signing and submitting it is what actually moves ownership of titled property. | Always, for anything titled. The bill of sale supports it; it does not replace it. |
If you are selling something titled, do all the paperwork on the same day: sign the title, sign the bill of sale, take a photo of both, note the odometer, and file whatever release-of-liability form your state provides. That last form is the one sellers skip and regret — until it is filed, the state may still consider the vehicle yours for tolls, tickets and liability.
Before you file
A bill of sale generated anywhere has to be checked against your own state's requirements before it is signed. Specifically: whether your motor vehicle agency has its own mandatory form, whether notarization is required, whether the buyer and seller must appear together, what sales tax filing the sale triggers, and whether a release of liability has to be filed and by when. Those five answers live on your state agency's site and take about ten minutes to find.
For the other statutory instrument most people write themselves, see our guide to powers of attorney — including the case where someone signs a bill of sale as an agent, which requires the power of attorney to name that authority specifically. And if the sale is part of a larger deal with obligations running past the handover, you want an agreement rather than a receipt; the 15-point review checklist covers what that agreement needs.
Frequently asked questions
What is a bill of sale?
A bill of sale is a written record that a specific item of personal property was sold by one named person to another, on a stated date, for a stated price. It documents a transfer that has already happened rather than promising a future one, which is what distinguishes it from a purchase agreement. It is evidence of the sale and of what the parties agreed about condition and title — not, by itself, a registration or a title transfer.
What must a bill of sale include?
Full legal names and addresses of the seller and buyer; the date of sale; a description of the property specific enough that it cannot be confused with anything else, including a VIN or serial number where one exists; the purchase price and how it was paid; a statement that the seller owns the property and it is free of liens; a conspicuous AS IS disclaimer if the sale is without warranties; the odometer reading and disclosure for a motor vehicle where required; and signatures from both parties. Add a notary block whether or not your state requires notarization.
Does a bill of sale need to be notarized?
It depends on the state and on what is being sold. Several states require a notarized bill of sale for a motor vehicle or a boat, and some require the buyer and seller to sign in front of the notary together. Where it is optional, notarizing is still worth the fee: it makes the document much harder to dispute later and some lenders and registries want it regardless. Check your state's motor vehicle agency before you sign.
Why does the AS IS clause have to be in capital letters?
Because UCC § 2-316 requires an exclusion of the implied warranties of merchantability and fitness to be conspicuous when it is in writing, and the exclusion of merchantability must actually use the word 'merchantability'. Bold capitals in their own paragraph are the customary way to satisfy conspicuousness. A disclaimer buried in the same font in the middle of a paragraph can be held ineffective, which leaves the implied warranties in place — the exact outcome the clause exists to prevent.
Do I need an odometer disclosure when I sell my car?
Under the federal rule at 49 CFR § 580.17, a vehicle from model year 2010 or earlier is exempt once it is transferred at least ten years after January 1 of its model year, so all of those are now exempt. Vehicles from model year 2011 and later are exempt only twenty years after January 1 of the model year, which means no 2011-or-newer vehicle becomes exempt before 2031. If your vehicle is not exempt, the disclosure is required and it normally goes on the title itself rather than only on the bill of sale.
Does a bill of sale transfer ownership of a car?
Not on its own. For any titled property — cars, trailers, boats, aircraft — legal ownership transfers through the title document and the state's registration process. The bill of sale is supporting evidence: proof of what was paid, when, and on what terms, which is what the tax authority and the registry ask for. Selling a titled vehicle with a bill of sale and no signed title leaves the buyer unable to register it.
Selling something with terms that outlast the handover?
A receipt is not enough when there are deliverables, payments or promises still to come. Describe the deal in plain English and the generator drafts the agreement it needs.
Generate an agreement →Sources
- Legal Information Institute, Cornell Law School — UCC § 2-316 (Exclusion or modification of warranties)
- Legal Information Institute — UCC § 2-314 (Implied warranty: merchantability)
- 49 CFR § 580.17 — Exemptions from odometer disclosure
- National Highway Traffic Safety Administration — Odometer fraud
- FTC — Used Car Rule (Buyers Guide)
This article is general information about how contracts commonly work, not legal advice, and reading it does not create an attorney-client relationship. Laws differ by jurisdiction and change over time. Consult a licensed attorney in your jurisdiction before relying on any agreement.
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