A warranty bill of sale offers protections for the buyer that a simple receipt does not. Warranties in a warranty bill of sale offer protection from third-party ownership claims. This kind of bill of sale gives a guarantee to the buyer about the seller's ownership rights. It promises that the buyer holds an undisputed title to the item sold.

However, regardless of the type of document used, it's always essential to fully understand the terms and conditions before signing any legal agreement.

The importance of bills of sale for financial records

Whether quitclaim or warranty, bills of sale should be an integral part of the transaction as they help maintain the financial records. They are valuable for tax reporting and general accounting purposes. The template attached to this page can be a good starting point for obtaining a written acknowledgment of your property sale and providing essential documentation of your ownership rights.

What are the key aspects to consider for a quitclaim bill of sale?

Filling out a bill of sale

Filling out a bill of sale is not always mandatory for every business deal. A simple receipt may suffice in many situations. However, suppose you’re buying or selling an expensive or unique property or anticipate that ownership of the property might be questioned in the future. In that case, ensuring you have a complete bill of sale signed and witnessed is crucial.

Keeping a log of property exchanges

It is recommended that property transactions be recorded for both buyers and sellers. Maintaining a numbering system can facilitate searching for specific sales.

Retaining a record of every bill of sale

Retaining a record of every bill of sale you issue is crucial. You can save an electronic copy on your hard drive or make a physical copy of the document given to your customer. Maintaining an itemized record of all bills of sale for tax and accounting purposes is recommended.

Obtaining accurate contact information

Obtaining the correct name and physical address of the other party to your deal is crucial in case you need to contact them later.

Utility of a bill of sale

Bills of sale are typically used to transfer personal property, such as furniture and equipment. However, they are not used for real estate transactions. Buying or selling real estate involves different documentation kept at local government offices. It is also worth noting that certain types of personal property, such as cars or boats, requires more information and separate forms to complete an official transfer of title.

Transferring ownership of intellectual property

The seller must use a legal document known as an "assignment" to transfer ownership of intellectual property (such as copyrights, trademarks, or patents). A bill of sale won’t suffice for this purpose.

Receiving payment when selling a property

If you’re selling a property, it's essential to give the buyer a completed bill of sale only after you have received your money and the transaction is complete. The bill of sale serves as written evidence that you have already been paid, and any outstanding amounts may be difficult to collect once the buyer has proof of payment.

Understanding the clauses for a bill of sale

The following provision-by-provision instructions will help you understand the terms of your quitclaim bill of sale.

Purchase price

In this part, make sure to mention the total amount paid for the property, including any previous down payments.

Names of parties

This section introduces the parties in the agreement and specifies the date it was signed. In a quitclaim bill of sale, one party is referred to as the "seller," while the other is known as the "buyer." The seller is the individual or entity that will sell the property, and the buyer is the one who will purchase it.

Property information

Provide a detailed description of the property you intend to sell or purchase. Ensure that the description is specific enough to identify the property in question. If the property has a serial number, include it in the description.

Property title

This section makes this bill of sale a "quitclaim" document. The seller notes that it only transfers what it has and makes no guarantees about what that is or whether any other individual or company has ownership rights or liens on the property.

Condition of property

In this segment, the seller does not guarantee or promise the condition of the items. The property is being sold "as is," meaning the buyer will precisely receive what is shown to them. However, it is important to note that if the seller has information about any defects or issues with the property, they must disclose them to the buyer. It will help prevent future claims that the sale was void due to the buyer being misled or defrauded.

Signatures

Only the seller needs to sign the bill of sale. A witness's signature may only be necessary in some states. However, if a third party witnesses the execution of the bill of sale, it may protect the parties from later claims of invalidity or lack of agency.

Frequently asked questions

What's a quitclaim bill of sale?

Use a bill of sale if you or your business wants to sell something to another party—such as merchandise or equipment you no longer need. A quitclaim bill of sale doesn't afford buyers the same protection from third-party ownership claims as a warranty bill of sale, but it's a convenient way to transfer many different kinds of property quickly. However, please note that a bill of sale cannot be used to buy and sell real estate.

What information is needed to complete a quitclaim bill of sale?

Here's the information you'll need to complete a quitclaim bill of sale:

• Who it's coming from (the seller): Determine if a business or individual selling the property is sending the document and have the name and contact information ready
• Who it's going to (the buyer): Know who this document is going to and have the individual or business name and contact information ready. If it's a business, know the business type (LLC, corporation, and more)
• Governing laws: Specify a state so it's clear what laws apply to the document
• Subject matter: Have information about how much the buyer will pay for the property