Protect Yourself and Your Property with a Warranty Bill of Sale

Protect Yourself and Your Property with a Warranty Bill of Sale

by Brette Sember, Esq., November 2018

When you buy or sell property, it is common practice for a receipt to be involved in the transaction. However, a receipt simply shows that the transaction happened, along with the item and the price. When expensive or important items—that could be disputed at a later date—are bought and sold, it may make sense to create a warranty bill of sale.

Warranty bills of sale are commonly used in the sale of automobiles, motorcycles, boats, purebred dogs, or horses. It's important to check your state department of motor vehicles requirements for bills of sale if you are transferring an automobile, motorcycle, or boat, so that the new owner is able to register the vehicle.

Why Use a Warranty Bill of Sale

A warranty bill of sale offers protections for the buyer that a simple receipt does not. This kind of bill of sale clearly details what is being sold and gives a guarantee to the buyer about the seller's ownership rights. The bill of sale promises that the buyer holds full and clear title to the item sold. This gives the buyer protection, should there be a claim that surfaces later against the property.

Things to Include in a Warranty Bill of Sale

A warranty bill of sale should include the following information:

  • Names and addresses of the parties. The bill of sale should include the names of the people or businesses that are the buyers and sellers, as well as their addresses.
  • Description of the item sold. The bill of sale should include a detailed description of the item being sold. Identification or serial numbers are important to include, if they are available. If a car is being sold, the bill of sale should include the make, model, and year of the car, as well as the mileage and vehicle identification number (VIN).
  • Purchase price. Include the price that has been agreed on for the sale. If down payments are involved, break out all the components.
  • Warranty of sale. In this section, the seller warrants that they have full title to the property and are passing that to the buyer.
  • Indemnification clause. If there turns out to be a claim against the property that existed at the time of sale, the buyer agrees to indemnify the seller against it.
  • Condition of the property. The warranty bill of sale should include a section that describes the condition of the property, pointing out any defects or problems with the property that the seller is aware of. It should state that the property is being sold "as is," which means the seller does not promise it is in new condition.
  • Signatures. The document should be signed by the seller and buyer, and the signatures notarized or witnessed, depending what is required by that state's laws.

Bill of Sale Without Warranties

It is possible to transfer property without any warranties or promises about clear title. When property is sold without warranties, it means the property is essentially quitclaimed from seller to buyer. The buyer takes whatever ownership rights the seller has at the time of the sale and the seller makes no promises about having clear title.

Creating a Bill of Sale

You can create a bill of sale on your own by following your state's requirements. You also can use an online service provider who can easily create a bill of sale for your situation.

A warranty bill of sale documents the sale and lays out exactly what you are transferring. It details the seller's and buyer's rights so that there can be no confusion about the property being transferred, its condition, or the ownership rights involved.