Last updated July 4, 2024
What is a Bill of Sale?
A Bill of Sale records a transaction and transfers ownership of an item from a seller to a buyer. Even though people mostly use Bills of Sale for selling used cars, they are suitable for many different assets, including trailers, boats, animals, and more.
Bills of Sale are suitable for transactions where a buyer pays in full and accepts an item as is, also known as ‘sold as seen.’ If you need a contract that allows you to include warranties or outline a payment plan, a Sales Agreement may be a better option.
A Bill of Sale is also known as a:
- Proof of purchase
- Sales receipt
Our Bill of Sale template is suitable for all Canadian provinces and territories.
What is an "as is" Bill of Sale?
"As is" means that an item is sold in its current condition, meaning the buyer accepts the item with all its flaws. Therefore, a Bill of Sale with an as-is clause doesn’t include any warranties. The seller isn't liable for any item flaws, provided they haven't hidden or lied about them.
Therefore, a Bill of Sale protects the seller from having to provide a refund for any item-related issues after the buyer pays and receives the item. Our Bill of Sale template automatically includes an "as is" clause.
When should I use a Bill of Sale?
Anyone buying or selling items of value should use a Bill of Sale. Our Bill of Sale template can be customized for different types of personal-use property, such as:
- Motor vehicles, such as cars, trucks, and motorcycles
- Travel vehicles, such as trailers, motorhomes, RVs, and campervans
- Boats and other water vehicles, such as jet skis
- Off-road vehicles, such as bicycles, dirt bikes, golf carts, and snowmobiles
- Equipment, such as tractors, tools, appliances, and exercise equipment
- Animals, such as horses, cats, and dogs
- Personal property, such as clothing and jewellery
- Electronics, such as phones or computers
Remember that you cannot use a Bill of Sale to buy or sell real estate. Instead, you may use a Real Estate Purchase Agreement to outline transactions for homes or land.
Additionally, you cannot use a Bill of Sale to document the sale of a business or company shares. Instead, use a Purchase of Business Agreement or Share Purchase Agreement.
Purpose of a Bill of Sale
A Bill of Sale protects the seller's and buyer's interests and can prevent future disputes and issues. For example, an enforceable Bill of Sale:
- Documents the transaction: A Bill of Sale shows that a transaction took place on a specific date, proving that both parties wanted a transfer of ownership.
- Creates a paper trail: Without a written Bill of Sale, you may not have evidence of the transaction.
- Establishes as-is condition: A Bill of Sale proves that an item was sold as seen, with the buyer accepting the item’s condition.
- Records payment terms: A Bill of Sale establishes the agreed-upon sales price and payment terms between the buyer and seller.
- Satisfies legal requirements: Using a Bill of Sale is required when buying and selling certain items, such as vehicles and trailers. In Canada, you can’t register a motor vehicle with a properly executed Bill of Sale.
How to create a Bill of Sale
To create a Bill of Sale using our template, complete the following steps:
1. Describe the item
Provide the property's details. For example, if you are selling a used car, you will need the following information:
- Make
- Year
- Model
- Body type
- Vehicle identification number (VIN)
- Odometer reading
The item details you provide will depend on the item type. If you’re selling a horse, you’ll specify the breed, sex, age, and colour, plus any distinctive features.
List the name and addresses of both the seller and the buyer. If necessary, you can add more than one seller or buyer to your Bill of Sale.
3. Outline payment details
State the item's sale price and specify if sales tax will apply to the sale. Also, include the form of payment. Common payment methods that you can use in a Bill of Sale include:
- Cash
- Bank drafts
- Cheques
- Electronic transfers
4. Note any loans or liens
If there are any loans or liens against the item, be sure to note them and describe the arrangements for loan or lien repayment. Mainly, you need to specify whether the buyer or seller will pay off the loans.
If a loan or lien is going to pass to the buyer, the seller should reduce the purchase price by the corresponding amount.
What is the difference between a Bill of Sale and a Sales Agreement?
Generally, a Bill of Sale is used for straightforward transactions where money is exchanged, and the ownership of the item transfers from the seller to the buyer.
A Sales Agreement is used for more complex transactions where more details about the sale are required, such as information about any warranties on the item. A Sales Agreement can also be used to cover any services relating to the item, such as installation fees. If services are the only thing being paid for, use a Service Agreement instead.
Do I need to have the Bill of Sale witnessed by a third party?
Most jurisdictions do not require that a Bill of Sale contain witness signatures, but having one or two witnesses when the Bill of Sale is signed is better evidence that the parties entered into the Bill of Sale if the matter goes to litigation.
Who keeps the Bill of Sale?
In general, it’s a good idea for a buyer and seller to print and sign two copies of a Bill of Sale. By executing two copies, both parties can retain proof that the transaction occurred.
