How to Buy, Sell or Rent Like a Pro

Last updated July 4, 2024

Written by 

Zack Dean

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Reviewed by 

Sarah Ure

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Rebecca Koehn

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Buying, selling, and renting goods comes with risks and liabilities for all the parties involved. That’s why it’s crucial to follow the proper procedures and always have the correct documentation. Creating a paper trail can save you from many headaches in the event of disagreements or miscommunications with the other party.

In this guide, we’ll break down buyer and seller liabilities, consumer laws, and the most important documents to include in any successful transaction. 

Before buying, selling, or renting goods, it's always wise to have the proper documents on hand. It doesn't matter if you're a business owner, private seller, or customer; you'll benefit from having a paper trail because it establishes evidence that the parties have reached a deal and specific terms and conditions exist.

Here are some essential documents you’ll want to have readily available before heading into a private sale.

Sales Agreement

A Sales Agreement outlines all the terms of a transaction between buyer and seller. Specifying as many details as possible reduces the risk of any confusion, misunderstandings, or fraud between the involved parties. In extreme cases, it can help avoid legal action if there's a dispute.

The buyer and seller can use a Sales Agreement to specify:

• The cost to purchase an item
• Payment schedules
• The type of payments
• Deposits
• Liabilities and warranties
• The items description
• Any terms and conditions

Bill of Sale

A Bill of Sale is a valuable document because it proves that one party has transferred ownership of an item to another party. 

Businesses that sell many items over the course of a year should keep Bills of Sale on record because they're proof of income. They're valuable during tax season or in the event of an audit.

For private sales, it's particularly useful when selling appliances, animals, cars, electronics, firearms, workout equipment, and other personal property. Not only does it confirm the transfer of ownership, but some states also require a Bill of Sale when registering a recently purchased used vehicle or boat. Additionally, you can use it for tax and insurance purposes if you need to show an item's value. Think of it as a receipt that you've made for yourself.

A Bill of Sale and a Sales Agreement can sound like they serve very similar purposes. The main difference between the two documents is that a Sales Agreement provides details about payment plans and a warranty, while a Bill of Sale is evidence that a transaction took place and ownership of an item changed hands.

Personal Property Rental Agreement

A Personal Property Rental Agreement is similar to an Equipment Rental Agreement, except it's for smaller-scale items and is typically used more by individuals than businesses. It breaks down the terms of use, when the lessee needs to return the property, and how much it will cost.

If your neighbor wants to rent your expensive mountain bike for a couple of weeks, you might want to create a formal contract to ensure they use your valuable property under particular circumstances, so it's returned to you in the same condition it left in.

Vehicle Leasing Agreement

A Vehicle Leasing Agreement is used to rent a vehicle to a person or business. You can use the document to lease any motor vehicle with a Vehicle Identification Number (VIN).

It's ideal for businesses that require a vehicle they don't usually use and therefore don't own. For example, a residential plumbing company might typically do the majority of its work using a ladder but need a scissor lift in houses with high ceilings every once in a while. In this case, it could use a Vehicle Leasing Agreement to temporarily acquire a flatbed truck to transfer the lift to the site.

Individuals can also use a Vehicle Lease Agreement when lending a vehicle to a friend or family member for an extended period of time. While it might feel unnecessary to be so formal with someone you know personally, its purpose is similar to the documents mentioned above. It outlines the parties' agreement, so there's no confusion down the road.

Regardless of which document you require to fulfill your needs, there are four essential details you will want to address in your paperwork.

1. Description

An accurate description of the item for sale or rent makes a contract between the buyer and seller more valuable. In the event there's ever a dispute related to the product, the description provides some clarity.

Try to include details that make it unique or distinguishable from similar items. For instance, there are many blue trucks on the roads. Providing the make, model, and VIN clarifies which blue truck is transferring from the seller to the buyer.

On the other hand, if someone is buying an animal, the contract should specify more than just the type of animal. Include the breed, sex, age, and any unique markings as well.

2. Contingencies

Contingencies are conditions that the parties need to meet before officially completing a transaction. There may be unknown information at the time negotiations are held between the buyer and seller, and the completion of the agreement can depend on what that information reveals.

For example, the sale of a catering van or motorhome might be contingent on it passing an inspection. The deal is complete if it passes. If it fails, the agreement either falls through, or the parties continue to negotiate based on the new information.

3. Price

More often than not, private sales are pretty straightforward. You'll want to break down all the financial terms related to the transaction. You'll likely only need to include the item's price and when the seller will receive payment.

However, commercial transactions might include additional details, such as how much the deposit is or a payment schedule if the buyer is paying in installments.

4. Key dates

It's important to specify any key dates in your agreement. This includes basic dates like when payment is due and possession changes hands, but it can also have dates for certain contingencies.

When a person or business is liable, it means they're obligated or responsible by law. In selling or privately reselling goods, the seller holds some responsibility for the item functioning properly after its sold.

For example, if a person or business is selling a used vehicle and claims it’s never been in an accident, but it's later proven that it has, they could be obligated to take the vehicle back. The seller might even face other legal consequences because misrepresenting the vehicle's history could be considered fraudulent.

That’s why most people protect themselves from liability by reselling items “as is.”

“As is” is a legal term used in contracts where a buyer agrees to purchase an item in its current condition. In other words, a buyer is taking possession of property regardless of its known and unknown issues.

Selling an item "as is" basically frees the seller from most legal recourse if an unexpected problem with the item reveals itself after the sale.

How honest do you have to be?

There's a thin line between salesmanship and fraud. Just because you sell an item "as is," that doesn't mean you're untouchable in the eyes of the law. If it’s proven that you knowingly sold an item with flaws that prevent it from functioning correctly, you could be in trouble. Remaining silent about flaws and later claiming that the buyer "didn't ask" about them isn't a defense that will save you from legal action.

A seller could also find themselves liable for damages if a known safety defect eventually contributes to an accident or injury.

The Consumer Product Safety Commission (CPSC) protects consumers from goods that come with an unreasonable risk of severe injury or death. For private sellers, it even covers recalled items sold at garage sales. If you're unsure whether you're selling an unsafe product, you can look it up on this CPSC website.

The best practice for avoiding fraud allegations is to be as honest and transparent as possible.

There are some additional rules that extend beyond liability that buyers and sellers should be aware of that protect them from being misled or manipulated by the other party.

Canceling an agreement

Buyers and sellers have the right to cancel an agreement if the other party doesn't uphold their end of the deal. 

Sellers can withhold the item until the buyer meets all the contingencies and even stop a delivery already in transit. If the agreement ultimately falls through, the seller has the option to collect any damages and resell the item.

The Federal Trade Commission (FTC) has the "Cooling-Off Rule" that protects buyers in some circumstances, such as purchases made in high-pressure situations. The rule gives a buyer three business days to change their mind about a purchase. However, contrary to popular belief, the Cooling-Off Rule doesn't cover motor vehicle purchases. A buyer should review what the Cooling-Off Rule covers and never make assumptions before making a purchase.

Connecticut, California, Massachusetts, Minnesota, New Jersey, New Mexico, and New York have lemon laws to protect buyers if they purchase a defective vehicle, but even these laws are difficult to enforce in many cases.

Warranties

A warranty is typically an agreement between the manufacturer or retailer and the original purchaser (the seller). A reseller likely doesn't have the authority to extend the warranty to a new owner, and the retailer's obligations are usually only to the person with whom they made the original transaction.

Buyers and sellers should be aware of two common types of warranties: Express Warranties and Implied Warranties.

An express warranty is basically a written or verbal guarantee that an item will provide a specific level of reliability and quality. If it doesn’t, the manufacturer will fix or replace the item free of charge.

An implied warranty guarantees an item will, at a minimum, work as claimed. This warranty covers used items as well. For example, if a recently purchased lawnmower's blades don't spin fast enough to cut grass, the item isn't performing what it claims to do and is covered under the implied warranty.

Advertising

When reselling a product, a seller shouldn't simply copy and paste a retailer's advertisements for their own ad. Any ads about the item should accurately reflect its current condition so a buyer has the best possible impression of what they might purchase.

It's generally acceptable for the seller to give an opinion about the item, but it needs to align with an accurate description of the product. For instance, a seller can give the opinion that the tractor they're selling runs well because that isn't a measurable statement that can easily be proven fake. It's more of a sales pitch than anything else.

From a buyer’s perspective, there are some steps they can take to protect themselves from sellers who do business in bad faith.

1. Read seller reviews

If the seller lists their items on a website that provides customer reviews, a buyer should take some time to read about other people's experiences. Knowing they're buying from a reputable source can give peace of mind to a buyer.

2. Test the product

It's always good to test a product before buying it. Doing so allows a buyer to ensure it works properly and compare it to a newer version of the item.

3. Ask a lot of questions

You can never have too much information. A buyer should research the product so they can ask the seller informed questions. Some general topics to touch on include the product’s:

• Age
• Condition
• Defects
• Maintenance
• Storage

4. Document correspondence with the seller

An organized history of all communication with the seller can protect a buyer if they attempt to deny the existence of previous agreements.

Identifying an online scam

Reselling items online is often the most convenient way to find used products to purchase. Unfortunately, there are people out there who take advantage of the anonymity to scam buyers and sellers.

Here are some signs that the person you’re dealing with might have bad intentions: 

• The seller refuses to meet in person before completing the transaction.
• The seller asks the buyer to send the money through a wire service.
• The seller requests that the buyer send a cashier's check, money order, or escrow service.
• The buyer wants to continue the sale outside the website where the product is listed.
• The buyer offers more than the listed price.
• The buyer or seller uses vague terms like "the item."
• Someone from far away is inquiring, especially from a different country.

There's essential legislation in the U.S. that individuals and businesses should be aware of before buying and selling items:

• CAN-SPAM Act: Regulates the methods businesses can use to market and interact with customers through email campaigns.
• Copyright Act of 1976: The “first sale doctrine” means a copyright owner no longer has rights over a copyrighted item once it’s sold. This permits a person to resell items lawfully.
• Consumer Product Safety Act: Enforces standards and bans that protect consumers from unsafe products that can cause injury or death.  
• Fair Credit Reporting Act: Regulates the collection of credit information.
• Telephone Consumer Protection Act: Restricts soliciting through automatic dialing systems, fax machines, prerecorded voice messages, and text messages.
• 18 U.S. Code § 1001: Protects consumers from acts of fraud.

Whether commercially or privately, buying, selling, and renting goods or property is a straightforward process when the parties do their due diligence by having the proper documents and following the law. Doing so eliminates any liability risks and gives everyone involved a pleasant experience.