What are a purchase order? What is a bill of sale?

Once the final documents for a lease transaction are prepared and executed (signed) by both the lessor and the lessee, the lease asset is generally acquired using a purchase order.  A purchase order is an offer for the purchase of a certain asset that specifies the terms and conditions under which the buyer is willing to make the purchase and is used to arrange for the transfer of the asset’s title from the asset’s vendor to the buyer.  For the purchase of a lease asset, the lessor usually issues a purchase order to the asset’s vendor.  However, if the lessee has already entered into a purchase agreement with the vendor, the purchase order is assigned by the lessee to the lessor.

Finance Leasing Process

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A bill of sale is a document that evidences the transfer of title to an asset from the seller to the buyer upon payment, subject to the terms of a purchase order or assignment.  When a lease asset is purchased from the lessee or a nonvendor third party, a bill of sale is normally required by lessors to evidence transfer of the asset’s ownership.  Vendors generally deliver an invoice with the purchase of assets, which acts as a bill of sale and evidences the transfer of title to an asset.

Purchase Order →	Bill of Sale →	Title
From Seller to Buyer	From Buyer to Lessor	Filed with Registry