Legal rights relative to car trade in

I recently(4 days ago) traded in my daughter's used car to a dealer for a later model vehicle. The the dealer test drove my daughter's car and it was working fine (no previous problems). The dealer accepted the trade in and the contract was executed and my daughter now has the later model car in her possession. The payoff check by my financial institution was delivered to the dealer today.

I went up to the dealership yesterday to pick up a garage door opener that my daughter had left behind. The sales manager immediately stopped me and said that my daughter's car engine had "siezed up" when they were doing an extensive emissions control check on it.

My basic question, since I don't have the registration, title or licence for the new car is: Is there any way that the dealer can take action against me or change the terms of the contract, or even withold the title from me on the later model vehicle, based on the problems they are now having with the vehicle I just traded in?

We had no evidence or history of problems with that vehicle and it was running fine when the dealer accepted it in trade. We live in New Mexico and the dealer is in Colorado. The dealer hasn't threatened to do anything, but I'd like to know what my rights are, just in case. One of the local NM dealerships told me that it was a done deal, but I'd like a little more of a "legal second opinion". Thanks to anyone who may respond.

In all the paperwork you signed at the dealership should have been a release of interest for the trade in vehicle. This should prevent them from holding anything against you. It is possible one of the mechanics or salesman took the car out for a test drive and took the car to a local drag strip. The title to newer vehicle should have been sent out immediately to the finance company, the dealer cannot hold it. If the dealer does decide to hold you liable, they will have to take you to court.