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A horse bill of sale formally documents the purchase of a horse between a buyer and seller, detailing the purchase price and other relevant information, along with the signatures of both parties. After finalizing the sale document, ownership transfer is recorded. 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, as ownership entails significant responsibility. Steps recommended include finding a seller with the desired horse type, setting a budget (considering space, food, and care), and handling the horse to test it before negotiating the purchase.