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A horse bill of sale formalizes the purchase of a horse between a buyer and seller, documenting the purchase price, relevant sale details, and both parties' signatures. This written document signifies the transfer of ownership. The video covers essential information about horse Bill of Sale forms and where to find a free official template. It emphasizes the importance of following best practices when buying a horse, regardless of experience level. Key steps include locating a suitable seller, determining your budget (considering space, food, and care), and personally testing the horse before completing the purchase.