The receipt you give when selling a car is also known as a bill of sale. It is optional in some states and required in others. It also serves as a title replacement in some states for transfer of ownership if the car's original title is not on hand.
Types
Depending on the state you live in, an official, state-provided bill of sale may be required along with the title. In such a case, you can download the form from your state's website or find you have to go to a local office to obtain one. Most states allow you to create a bill of sale on your own, either by hand-writing it or printing it from your computer. Before creating a bill of sale, contact your motor vehicle office for any state requirements.
Features
Several pieces of information should be included in the bill of sale. Either the seller or the buyer can create one, listing the name, address, driver's license and phone number of each party, the date of sale and all relevant vehicle information. The vehicle information should include year, make, model, VIN (Vehicle Identification Number), sale price and odometer reading. If the seller is creating the bill of sale, he should include that the vehicle is being sold "as is," or without any warranty. Two documents should be created: one for the buyer and one for the seller. Both parties sign the copies.
Significance
In states that require tax on the sale price instead of the value determined by the motor vehicle department, stating the price serves as the taxable amount that the motor vehicle department will collect. In come states, the bill of sale serves as an odometer statement. If not a requirement, the bill of sale protects both the buyer and the seller. The seller can keep the bill of sale to prove the car was sold, should the buyer not immediately register and title the vehicle, making her liable for tickets, accidents, damage or abandonment. The buyer, having all of the seller's contact information, can rest assured that if something should go wrong at the motor vehicle department (such as an unmentioned lien or notice of salvage title) he can contact the seller by using the contact information on the bill of sale, or by driver's license number depending on the issues that arise.
Misconceptions
The bill of sale should accompany the certificate of title and any other forms required by the motor vehicle department. The bill of sale rarely, if ever, substitutes the official certificate of title. If you are buying a vehicle and the seller states the he does not have the title but can offer a bill of sale, contact your motor vehicle office to confirm that this kind of ownership transfer is possible. even if allowed, you should have the seller go to a motor vehicle office with you before you pay, to ensure that the title is free of any trouble, such as a non-transferable title with a lien on it, or a "salvage," "flood damage" or "fire damage" title, all of which lower the value of the vehicle you're purchasing.
Warning
Even with the bill of sale on hand, some states require that the seller notify the state of the vehicle's sale to avoid liability of actions by the new owner who did not retitle the vehicle. Check with your state's motor vehicle website or call to ensure the bill of sale is enough for proof of sale. Some states allow you to notify the state motor vehicle department online or by phone. Others require you to go into an office to complete the transaction.
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