When buying or selling a car in California, you always want to document the transfer of the automobile from the seller to the buyer. When the original title is available this is completed by signing the “Transfer by Owner” or “Assignment” section of the title and filing the paperwork with the state. We also suggest securing a California bill of sale to properly document the sale including the sales price, condition of the car, and hold harmless language to protect the buyer and seller.
Why Do You Need a Bill of Sale?
There are two primary reasons why you want to secure a Bill of Sale in California when purchasing or selling a car:
1. Automobiles can range in price from hundreds to tens of thousands of dollars depending on the year, make, model, condition, miles. Whether you are the person selling or buying, you want proof of the transaction in the event someone claims your ownership or if someone is injured by the vehicle.
2. All states require you register a car with the department of motor vehicles. Proper documentation of vehicle ownership is required in order to register your car.
What Does a Bill of Sale Need to be Valid?
A bill of sale acts as a contract between the buyer and seller of the car. Each state has different rules for what they consider a valid bill of sale, but a contract itself must abide by the following general rules:
Offer: The agreement to exchange the vehicle for an amount of money. May also include conditions of the sale for the buyer and the seller.
Consideration: The amount of money being exchanged. Usually in a numeric and written form.
Acceptance: Signatures of both parties on the bill of sale.
Competent Parties and Legal Intent: Both parties entering the contract must be competent (age, mental capacity, and not impaired or forced). The contract is also valid only if it is lawful. A contract to complete an illegal act is not binding.
What Should the Buyer do with the Bill of Sale?
After you have made a purchase and received an executed bill of sale the first thing you should do is put it in a secured location. If lost, you won’t be able to apply for registration, won’t be able to prove ownership if someone claims the vehicle is theirs, and you may have some difficulty selling the car. We always suggest locking up your bill of sale in a filing cabinet or safe, where a combination or key is needed to access, and also making a digital copy.
Does the Seller Need a Copy?
It is also a good idea that the seller keep a copy of the Bill of Sale, and the buyer keep the original. This will ensure the seller can document the sale of their vehicle if property is damaged or someone is injured during its use.
Car Bill of Sale Template