What does BILL OF SALE mean in Auto insurance?

17.07.2020
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Introduction

A bill of sale is a document that signifies a person or organization has sold goods to another person or customer. It is regarded as a legal document and can be used as valid proof in all legal matters. It also signifies that the ownership of goods has been transferred to another party.

In simple terms, the bill of sale is like a receipt that can be used as proof to signify a sale. It is required that the party who is purchasing a car or any other asset should make sure that the bill of sale is complete and properly signed by both the parties. It also serves as evidence in the court of law that the ownership of the property has been transferred to another person.

The Bill of sale document holds terms of the sale, including information about price, delivery, and condition. In addition, this document is used by many states to determine the amount of sales tax owed on the transaction, if any.

What does a Bill of Sale for a Car include?

1. The date of the sale.

2. A description of the vehicle, including its:
Year, make and model
Vehicle identification number
Current mileage
License plate number

3. The selling price of the car: It shows the amount that the Buyer has to pay the Seller in full by cash, guaranteed check, money order, or other methods of payment agreed upon by both parties.

4. Holding deposit (if any): It shows an agreement between both the parties that if the buyer fails to pay the remaining balance of the agreed-upon purchase price by the specified date, the buyer can not do further claims to the above-mentioned vehicle. If payment is not completed by the agreed-upon date, the seller has no further commitments and the terms of this agreement may become null and void.

5. Warranty information: Most private party sales are assumed to be “as is,” meaning that there is no warranty. But if an individual has a different agreement, he/she has to put it in the bill of sale.

6. The full names, addresses, and signatures of the buyer and seller: Above the signature, there is a language stating that the information is correct. Generally, it reads something like this: “I declare under penalty of perjury that the statements therein contained are true and correct to the best of my knowledge and belief.”

How does a Bill of Sale Work?

A bill of sale can be quite simple or quite complex, it depends on the type of transaction. A typical retail shopping receipt can also be considered a bill of sale, as it lists the specific goods with their respective prices that have been sold to the buyer.

When conducting transactions for assets having significant value, such as an automobile, motorcycles, and watercraft, it is important to make sure this bill is completed properly and received at the time of transaction.

The following are some major types of the bill of sale:

  • Absolute Bill of Sale: It is a document that simply shows the sale or transfer of goods. It does not represent any form of security for a loan or other conditions, but rather, it is a simple document evidencing assignments, transfers, and other assurances of personal chattels.
  • Conditional Bill of Sale: It is a document that represents the assignment or transfer of personal assets as a type of security to a creditor who lends money to a debtor. If the debtor becomes unable to pay back the loan, then the creditor has the right to take the personal property.
  • Quitclaim Bill of Sale: It is a document that is used when sellers cannot guarantee that they own the property and have the right to transfer it or when the seller does not want to warrant the title. As real estate transactions are complex, an individual should avoid quitclaim bill of sale when dealing with real estate.
  • Bill of Sale with Warranty: It is a paper in which sellers assure that they own the property and have the right to transfer it. This document helps to protect the buyer from claims in the future against the property.

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