Is it legal to write a bill of sale for less than the purchase price and supplement the rest with cash?

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Is it legal to write a bill of sale for less than the purchase price and supplement the rest with cash?

Specifically, can the buyer be held responsible?

Asked on November 24, 2015 under Real Estate Law, Alabama

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

It is legal but not necessarily enforceable: that is, if the buyer honors his/her obligation to pay the balance with cash, the seller can accept it; but if the buyer fails to pay and, if sued for the rest of the money (since suing would be the only way to try and get it), in court claims that the bill of sale reflected the full price, the buyer will almost certainly win--the court will take the written bill of sale as setting out the full price and will not order the buyer to pay more than is set forth in writing.
Furthermore, the seller needs to bear in mind that cash is not tax exempt: the seller needs to pay taxes on the full price he/she receives.


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