When you buy a new car, you have two choices as to what to do with your old used car. You can trade your car into the dealer you are dealing with and be done with it (often the easier approach) or you can sell the car yourself. If you are thinking of the later approach, you should have a comprehensive bill of sale that will protect you should a misunderstanding occur. Here’s a step-by-step guide to drafting a comprehensive bill of sale.
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1) The first sentence of the contract should identify the full legal names of both the buyer and the seller and state that the contract is for the sale of a car. For example, “This is a contract made between the Seller, Thomas Pierce, and the buyer, Franklin Smith, for the sale of Thomas Pierce’s 1995 Honda Civic sedan.”
2) Provide the buyer’s and seller’s addresses and the driver license numbers of both the buyer and the seller for identification and verification purposes.
3) Provide a description of the vehicle. Use as many identifying characteristics of the car as possible. Include as many of the following details as possible, such as: Model year, Color, Make and model, Body style (pickup, SUV, sedan), Interior color, Vehicle Identification Number (VIN) and Odometer reading. For example, “The vehicle is a silver 1995 Honda Civic LX with black leather interior and a sunroof. The VIN number is #CHE127849 and the odometer reads 147,456 as of March 14, 2015.”
Be sure that the information you state is accurate. Incorrect claims about the details of the car or the terms of the sale can lead a contract to be voidable in a court of law. For example, if the owner of the car notes that the car has 147,456 miles on it in the contract, but knows that the vehicle actually has 200,000 miles and a faulty odometer, the entire contract may be voided.
Kayser Chrysler Center of Sauk City, WI states that if the odometer has ever been replaced or repaired, that this must be mentioned in the contract. You can use the following boilerplate language: “I certify that the car’s odometer was altered for repair or replacement purposes while in my possession, and that the mileage registered on the repaired or replaced odometer was identical to that before service.”
4) State the date of the sale and the purchase price. Describe the method of payment—cash, personal check, cashier’s check, money order, etc. For example, “The date of sale is March 14, 2015. Buyer agrees to pay to Seller the purchase price of $500 to be paid in cash.”
5) If you describe the condition of the vehicle, be very through. Note that Sellers usually sell cars “as is,” which limits the seller’s liability for any problems with the car’s condition. A statement that the car is sold “as is” and that the owner “makes no warranties about the condition of the car” is sufficient.
6) Specify the status of the title. An owner may only sell a vehicle if it has a clear title, which means that there are no liens on the title for car loans or other legal action against the owner. Some typical verbage could be: “The Seller warrants that 1) the Seller is the legal owner of the car; 2) the car is free from all liens and encumbrances; 3) the Seller has full right and authority to sell and transfer the car.
7) Sign and date the contract. Each party should sign and date the contract. Make a copy of the contract after everyone signs. One party should retain the original and one party should retain a copy. It does not matter who retains the copy versus the original.
A witness or notary should also sign the contract after each party has signed the contract. Though it may not be legally required to have a witness to the sale of a car in most states, having a witness to the contract may mitigate legal disputes about the accuracy of the contract.