The purchase or sale of a vehicle is one of the big financial decisions of life.
It’s a little more complicated than going to the store to buy milk or eggs, and it requires a little more thought and preparation to make sure you don’t get stuck with a lemon or buy something that’s past its best years.
Selling or buying a car can also require the use of important financial documents that some simpler financial transactions don’t need.
A bill of sale is one of these documents.
Here’s what you should know about a bill of sale when buying or selling a car in Canada, from Alberta to Ontario.
A bill of sale is a basic sales contract that is exchanged between the buyer and seller when a used car is bought or sold.
When you buy something at a store or order something online, your receipt is the document that takes the place of the bill of sale. This contains all the most important details related to the transaction, like the amount, the products you bought and where or when these items were purchased.
Receipts are proof for the purchaser (that’s you!) that you bought their items from this store, and proof for the store that the items were bought from them. You’ll refer back to your receipt if you need an exchange, if you have questions about the prices, product or retailer or when it’s time for tax: The same way, the retailer uses the receipt when they fill in their taxes or check their stock.
A bill of sale is like a receipt, but required for larger transactions: Usually ones that measure CA$500 or more.
When buying or selling a car, the bill of sale fulfills the same conditions that a receipt would when something gets purchased: It serves as both proof and reference for the transaction having taken place.
Why You Need It
Whenever something is bought or sold, a financial transaction and agreement has taken place whether or not there is a receipt or bill of sale.
So, why do you need one?
When a transaction takes place, the sale agreement is always implied once the goods have changed hands – even if the transaction might take place verbally. But how do you prove that you exchange goods with a company or person if the agreement was verbal? You can’t.
That’s where the bill of sale comes in, and that’s the easiest way to describe to you why you always need one – especially when it comes to bigger financial transactions that are worth more money than going to the store to buy milk or eggs.
Without a proper bill of sale that lists the most important particulars of the transaction and those who were involved in it, both parties (buyer and seller) are sitting ducks and will have no mutual protection going both ways if one of these sides feel they have been done in or decide that they aren’t happy.
What to Include in It
A bill of sale is in place to prove a financial transaction has taken place for both the buyer and seller: It proves what has been bought or sold, what conditions the transaction took place under, which condition the goods were in at the time and other important particulars like the details of the buyer and seller involved.
For a bill of sale to be valid in Canada, it should include:
1. The Details of the Buyers and Sellers
- The full name(s) of the buyers and sellers involved in the transaction.
- The address(es) of the buyers and sellers involved in the transaction.
- A form of government-issued ID from the buyers and sellers involved in the transaction.
2. The Details of the Goods
- The paid cost of the item that’s being bought or sold.
- The specific details of the item being bought or sold (such as the make, model, color and year of the vehicle).
- The VIN (Vehicle Identification Number), also sometimes called the “serial number” of the car.
- The condition, described as accurately as possible, of the vehicle being bought or sold.
- The current registration number of the vehicle.
3. The Agreement and Transaction
- The date of the transaction the bill of sale describes, usually the signatory date.
- The signature(s) of both the buyer and seller involved in the transaction, and usually the signature of an accompanying witness for each.
These are the basic requirements that you’ll see in most bills of sale, and you should make sure that thy are included in your bill of sale when you buy or sell a car.
There are also a few other important vehicle-related documents that you might see accompanying bills of sale.
Some of these include the physical ownership registration papers of the car, which have to be exchanged at the same time as the car (and subsequently filled in by the new owner within a specific time-frame to prove the change of ownership) and detailed photographs of the car to prove what condition it was in.
If there are any disputes, disagreements or questions about the sale (or the condition(s) of the goods or sale) after it has taken place, the bill of sale serves as mutual protection for both the buyer and the seller. Without a bill of sale present, the transaction and conditions it happened under are harder to prove by either party, and neither of them could have recourse if they are done in by the other.
What “As Is” Means in a Bill of Sale
There’s one more thing that vehicle buyers and sellers might see on a bill of sale: The term “as is.”
Where you see the term “as is,” it describes the condition that the vehicle is currently in when it exchanges hands and the bill of sale is signed.
The phrase “as is” usually means that both the buyer and seller are aware of the condition of the vehicle at the time: it means that issues with the car have to be disclosed if the seller or buyer knows about these issues at the time – and it can mean that you have legal recourse in the event that you were sold a vehicle with issues that the seller knew about but didn’t bother to mention.
Don’t Know? Don’t Sign
If you have a sinking feeling in the pit of your stomach when about to sign a bill of sale or there’s something on the document that you don’t agree with or have questions about, don’t sign it.
As a legal signatory, you always have the right to back away from signing something, take it to your lawyer from there and ask them what this means.
Remember this and you’ll be able to avoid ending up with regretted financial transactions or issues later on!
Disclaimer: This article and use of the template do not constitute legal advice. Please seek professional advice from a licensed attorney for legal matters.