California Bill of Sale: Everything You Need to Know
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When buying and selling cars in California, you should familiarize yourself with a bill of sale, which serves as proof of the transfer of ownership and is also necessary to register a motor vehicle. It also protects the buyer and seller of private sales from potential liability issues.
This guide explains the process of creating, completing, and submitting the bill of sale, including how to pinpoint situations when the document is required and how to avoid common mistakes when drafting your own bill of sale.
Understanding the Importance of a California Bill of Sale
A bill of sale is a legal document that records the details of a transaction between a buyer and seller. In the context of vehicle sales, it serves as a written agreement outlining the terms of the sale. The document includes the vehicle’s description, purchase price, date of the sale, and the buyer and seller’s names and signatures.
As a legal document, the bill of sale in California carries significant weight, protecting each party involved in the sale. For the buyer, it is evidence of legal ownership and serves as a stopgap between the purchase and registration. For the seller, it shows the exact date and time of the sale and transfer of ownership, limiting liability exposure.
Because the bill of sale specifies an agreement between consenting adults, it also prevents disputes. For example, suppose a buyer gets into an accident before registering the vehicle. In that case, the document protects the seller by showing they no longer owned the car at the time of the accident. Also, if a seller changes their mind or hides information from the buyer, the bill is proof of the transaction and original agreement.
Key Components of a California Bill of Sale
At a minimum, A legitimate bill of sale should include the seven following items:
- Vehicle information: This section should include the car’s year, make, model, and license plate number, as well as the VIN and any other identifying marks or descriptions. The description must be as accurate as possible to avoid any disputes later.
- Buyer and seller information: The bill of sale should clearly list the full legal names and addresses of the buyer and seller. To protect against fraud, include both parties’ driver’s license numbers or other government-issued ID numbers.
- Odometer disclosure: California law requires an odometer disclosure statement for most vehicle sales. The statement should accurately reflect the mileage at the time of the sale.
- Purchase price: Every bill of sale must include the purchase price. Write the number numerically and in words to avoid ambiguity.
- Signatures: The buyer and seller must sign the document. Their signatures acknowledge the terms of the sale, the accuracy of the information, and their agreement to each.
- Date of sale: The date specifies when the transaction occurs. If you want to get more specific, include the time.
- Warranty information (if any): Some sellers include warranties in the sale, especially for newer vehicles. However, most used cars and private sales don’t offer warranties, selling vehicles as-is.
To avoid mistakes, consider using the California DMV Bill of Sale form.
When Is a Bill of Sale Required in California?
You need a car bill of sale in California in certain situations. For example, you may need a bill of sale for a car donation in California. Other instances include:
- Registering a vehicle from out of state
- Incomplete or missing title
- Private sales
- Gift transfers
Commercial dealer sales may not require a bill of sale because they typically handle the transfer of ownership in-house. Also, if you buy using a lease, the lease agreement is proof of the transaction.
How To Complete a California Bill of Sale
Completing a bill of sale is as easy as filling in the blanks, especially when using a bill of sale template. The bill of sale from the DMV in California is minimal, but it works. However, while the template has the registered owner release line and includes the sale price, which is enough to figure out California car sales tax and fees, it doesn’t offer space to specify the car’s condition.
Using a Bill of Sale for Title Transfers and Registration
A bill of sale acts as proof of the ownership transfer of a vehicle. It is proof of the transaction between the original owner and the buyer and can, therefore, stand as proof of a title transfer in the registration process.
Common Mistakes To Avoid When Completing a Bill of Sale
Of the forms needed to sell a car in California, the bill of sale is among the most significant because it offers legal protection. Unfortunately, simple mistakes can void the document and its protections. Common mistakes to avoid include:
- Incomplete or inaccurate vehicle information
- Missing or incorrect buyer/seller information
- Incorrect purchase price
- Missing or incorrect date of sale
- Odometer disclosure issues
- Missing signatures
- Not keeping a copy
- Making assumptions
Whether you are a buyer or seller, always double-check the bill of sale so both parties understand the agreement and that no details are left out.
Get the Right Car Insurance for Your Vehicle Transaction
While California car insurance isn’t directly related to a California bill of sale, having reliable insurance can protect your investment. Check out EverQuote to compare multiple insurance quotes, and find a policy that suits your budget and needs.