Texas Bill of Sale: How to Legally Transfer Vehicle Ownership
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When you buy or sell a vehicle in Texas, a bill of sale records the details of the transaction. A bill of sale is a legally binding document that protects both buyers and sellers from future disputes by absolving the seller of liability and providing proof of ownership for the buyer.
These written agreements are most commonly used for vehicle transactions, but they’re sometimes also used to transfer ownership of other high-value items such as watercraft, aircraft, or livestock. This guide will cover everything you need to know about drafting a bill of sale in Texas, what it can be used for, legal requirements, and common myths.
What Is a Texas Bill of Sale and Why Is It Important?
A Texas bill of sale is a legal document used by those buying and selling cars in Texas. It records the crucial details of the transaction, including buyer and seller information, an item description, and the terms of the sale.
Not only does this document act as proof that the transaction occurred, but it can also help prevent legal disputes. A Texas vehicle bill of sale can be used to:
- Provide proof of vehicle ownership for the buyer when titling or registering the car with the Texas Department of Motor Vehicles (TXDMV)
- Protect the seller from liability claims
- Provide proof of the sale for tax purposes
- Protect both parties from fraud and ownership disputes
Is a Bill of Sale Legally Required in Texas?
A bill of sale is not legally required to transfer ownership of personal property in Texas. In fact, most states don’t require bills of sale for vehicle transactions. However, while there’s no legal requirement, it’s strongly recommended that you complete a bill of sale and ensure it’s signed by both parties.
What Information Should Be Included in a Texas Bill of Sale?
A bill of sale for a car in Texas should include the following details:
- Legal names, addresses, and contact information for both the buyer and the seller
- The date of the transaction
- The purchase price
- A detailed description of the car, including its make, model, vehicle identification number (VIN), current odometer reading, and plate number (if you’re keeping the license plates)
- Any agreed-upon guarantees or warranties
- The signatures of both the buyer and the seller
How a Bill of Sale Helps Prove Ownership in Texas
A bill of sale helps prove that you own your vehicle in a number of ways. Firstly, it provides a written record that you legally purchased the car from the seller. This can protect you if the seller tries to dispute the sale price or claim the transfer of ownership didn’t occur.
In some cases, a bill of sale may also be used by county tax offices to determine the amount of sales tax you owe. You may also be asked to show it to your insurance provider when you apply for Texas car insurance or during an investigation of a claim.
Common Misconceptions About Texas Bills of Sale
Because a Texas bill of sale is a legally binding agreement, people often assume that it alone can transfer legal ownership from one person to another. However, only a title transfer does that.
You still need to complete a vehicle title application, register the car with the TXDMV, and complete all other legal requirements using the official forms for selling a car in Texas. All cars must be titled in the new owner’s name within 30 days of the transaction date.
Motor vehicle sales tax also applies with a private sale. You need to make sure you pay all required Texas used car taxes and fees.
Best Practices for Creating a Legally Sound Bill of Sale
In order to create a legally binding bill of sale in Texas, do the following:
- Clearly identify the parties involved in the transaction, using full legal names and addresses.
- Provide a detailed and accurate description of the vehicle, including any damage or modifications.
- Specify the exact purchase price and describe the payment method, including any financing agreements.
- Clearly outline any warranties or state that no warranties apply.
- Ensure both parties sign the bill of sale. While it’s not required, getting your bill of sale notarized by a qualified notary public can offer additional legal protection.
In Texas, a handwritten bill of sale is sufficient as long as all information is present. You can also reference Vehicle Transfer Notification (Form VTR-346), the official Texas motor vehicle bill of sale notification form.
Protect Your New Vehicle With the Right Car Insurance
You’re required to purchase car insurance before registering a vehicle in Texas. To get the best coverage for the best price, it’s helpful to get multiple quotes from different insurance companies. But going through the application process can be time-consuming and repetitive.
EverQuote makes it easy. Just answer a few questions about yourself and see multiple car insurance quotes side by side for free, then choose the policy that meets your coverage needs and budget.