California Bill of Sale

When do you need a Bill of Sale?

Use a Bill of Sale when: you sell your car to a private party (NOT to a dealer), sell motorcycle, boat, or recreational vehicle, sell business equipment or valuable tools (over $500), sell horses or livestock, sell jewelry or valuable art, sell any used personal property where money is involved. California DMV REQUIRES a Bill of Sale to transfer title of vehicles sold between private parties. Without it, the buyer can have trouble registering the vehicle in their name.

What is included?

• ✓Complete identification of seller and buyer
• ✓Detailed description of the item (VIN, model, year, color)
• ✓Agreed price and payment method
• ✓Transfer date
• ✓"AS IS" clause (no warranty)
• ✓Space for signature and notarization
• ✓Bilingual English/Spanish

For California vehicles

For vehicles, in addition to the Bill of Sale, you also need: Title (Pink Slip) signed by seller, Notice of Transfer and Release of Liability (REG 138 — must be filed with DMV within 5 days by seller), Smog Certificate if vehicle is over 4 years old, Bill of Sale Statement of Facts (REG 256) in some cases. The DMV uses the Bill of Sale to calculate sales tax. If you sell below market value, you must explain why to avoid tax fraud.

How to draft a valid Bill of Sale

1. 1. Identify seller and buyerFull legal names + addresses + ID numbers. If a party is an entity: corporate name + EIN + registered address.
2. 2. Describe the item sold preciselyFor vehicles: VIN + make + model + year + color + mileage. For boat: HIN. For firearm: serial number + type. For general item: detailed description + condition + accessories included.
3. 3. Specify price and payment methodTotal price in dollars + in words. Payment method: cash, check, transfer, financing. If partial payment, schedule of remaining payments.
4. 4. State condition and "AS-IS"Critical for California: "Item sold AS-IS, without warranty of any kind". Without this clause, seller can be sued for defects discovered later.
5. 5. Set date and place of deliveryWhen does possession change? Where? Who pays transport. Risk of loss passes to buyer at this moment.
6. 6. For vehicles: notarize and deliver titleCalifornia requires Form REG 135 (vehicle-specific Bill of Sale) + title transfer at DMV within 10 days. If you sell without delivering title properly, you remain liable if buyer causes accident.
7. 7. Both parties sign, keep copiesOriginal to buyer, copy to seller. For significant items, notarization adds legal force.

Common Bill of Sale mistakes

• ⚠Not including "AS-IS" clauseWithout "AS-IS", California applies implied warranties (merchantability, fitness for purpose). Buyer can sue for defects discovered later. Cost: hundreds to thousands.
• ⚠Selling vehicle without transferring title at DMVCalifornia Vehicle Code 5602: if you don't notify DMV within 10 days, you remain liable for accidents, fines, and even vehicle taxes. Process: $15 online.
• ⚠Symbolic price ($1) in family saleIf you sell car to family for $1, IRS and DMV may audit and reclassify as gift (gift tax if >$17,000 fair value, 2026 limit). Use fair price or document clearly as gift.
• ⚠Not identifying item with sufficient detail"My car" is not identification. Unique VIN. Without VIN, if you sell two similar vehicles, you don't know which was sold to whom.
• ⚠Accepting check without verifying fundsBad checks are the #1 Craigslist scam. Wait for check to "clear" at your bank — can be 5-10 days — before delivering the item.

Frequently Asked Questions

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You might also need

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