For private car owners, the process of selling a car comes with a lengthy set of risks. A handshake is not enough of a guarantee when a problem arises, especially when the two parties are strangers to one another before the sale. A car sale contract can help address any issues that may arise later on. To protect yourself from abusive buyers or an utter miscommunication, you need to make your contract thorough and complete.

A car sale contract goes by plenty of other names, such as a vehicle purchase agreement, auto sales contract, and private car sale agreement, among other things. However, in the Philippines, it’s more commonly known as a deed of sale. The good news is that it’s quite simple to create a deed of sale. All you have to do is follow the steps below:

1. Identify buyer, seller, and the reason for the sale

Along with the full name of both buyer and seller, the first sentence of the contract should also include the reason for the sale. So your deed of sale should begin with something like this:

“I, Juan dela Cruz, hereinafter referred to as Seller, and Laura Soriano, hereinafter referred to as Buyer, hereby agree to sell and transfer ownership of the vehicle described below to the Buyer.”

2. Identify the conditions of the sale

On the second sentence, you have to state that you are the owner of the vehicle for sale, and the amount of payment that you have received. You also need to include any information about the vehicle that can affect the transfer of ownership, such as liens and encumbrances. As such, this is how your second sentence should read:

“I certify that I have the authority to sell said vehicle, acknowledge receipt of full payment, and confirm that the vehicle is free of any liens or encumbrances.”

3. Provide pertinent vehicle information

Your deed of sale needs to provide complete and detailed information of the vehicle involved in the transaction. You need to be very specific, and include the trim line if applicable. For instance, if you own two Honda Civics, you need to be precise which car the contract is referring to. Be sure to include the following details in your contract:

  • Year
  • Make and model
  • Body type (sedan, coupe, hatchback, pickup, etc.)
  • Vehicle Identification Number
  • Engine number
  • Exterior color
  • Interior color
  • Odometer reading
  • Other distinguishing features

This is how the third sentence of your contract should look like:

“The vehicle being sold is a 2000 Honda Civic LX hatchback, with VIN no. 987654321 and engine no. 41526312. The car’s exterior paint finish is red hazel, with black leather interior. The odometer reads 456,654 as of September 1, 2016. The car includes a sunroof and aftermarket rear spoiler.”

4. Indicate the condition of the vehicle

Sellers usually indicate in the deed of sale that they are selling the car “as is,” which means the seller will not fix the condition of the vehicle, nor place a warranty on it. Deed of sale terms regarding the vehicle condition can read as follows:

“The 2000 Honda Civic LX is being sold “as is,” and the Seller outwardly disclaims any warranties on the condition of the car. That said, the Seller assumes no liability regarding the sale of the car.”

5. Confirm the accuracy of all the information you provided

Any incorrect or imprecise information written in the car deed of sale can void the contract. For instance, if the odometer reading on the contract is 100,000 but the vehicle actually has more than that, the entire contract can be deemed null and void. Be sure that all involved parties fully understand the implications of the contract and that no one is misrepresenting the vehicle or the amount of money involved in the transaction. The last sentence of the deed of sale’s first section should be worded similarly to this:

“I certify that all information in this contract is true and correct to the best of my knowledge.”

6. Write down the information of both buyer and seller

The next part of the deed of sale needs to provide Information on both buyer and seller, which should include:

  • Full name that appears on the government-issued IDs
  • Complete physical address where both individuals currently reside. Note the zip code
  • Phone number This is generally not required but can be useful for future reference.
  • Follow this format when writing buyer and seller information:

“Identity of the parties: Seller Juan dela Cruz, who resides in #16 Agudo Road Forbes Park in the city of Makati, with zip code 1219 and tel. no. 028589502 Buyer Laura Soriano, who resides in #18 Sampaguita St. Corinthian Gardens in the city of Quezon, with zip code 1110 and tel. no. 028574516”

7. State the date of sale, purchase price, and terms of sale

Indicate date of sale, sum of money agreed upon, and method of payment used for the purchase, whether cash, money order, personal check, cashier’s check, etc. If the sale is under a payment plan, then you need to stipulate the terms in the contract. For example:

“The date of sale is September 6, 2015. Buyer agrees to pay the Seller the total amount of P500,000 to be paid in cash.”

If you agree to a payment plan, be sure that you personally know the buyer. Many sellers have been duped into a fraud scheme where the buyer puts a down payment on the vehicle and drives off with it, never to be seen or heard from again. If a payment plan is the selected mode of payment, hold on to the car’s title until payments have been completed.

8. Sign and date the deed of sale

Both buyer and seller must sign the deed of sale and date it with the finalized sale date.

9. Make a copy of the contract

Furnish a copy of the deed of sale for yourself for documenting purposes. Give the original copy to the buyer.