My $0.02 worth....
First, the simple LEGAL part: If the buyer were to pursue his claim against you in court, you would likely have a valid defense in 'caveat emptor'. Simply, the buyer had the opportunity and the OBLIGATION to have a mechanic inspect the vehicle prior to purchase. If the fault could have been found and wasn't due to his failure, you are not liable. And if the fault was not known by you prior to the sale, I doubt he would prevail in court.
However, the problem you have is that this is not a simple 'claim' as you allowed him to take possession of the vehicle without obtaining full payment.... and without delivery of a valid title.
Unless this is resolved amicably, your options as I see them.. are to sue him in HIS home state for breach of contract, claiming the $700.00. He is liable to countersue for the 'damages' (unlikely to succeed) and a demand for title (likely to succeed).
First, the simple LEGAL part: If the buyer were to pursue his claim against you in court, you would likely have a valid defense in 'caveat emptor'. Simply, the buyer had the opportunity and the OBLIGATION to have a mechanic inspect the vehicle prior to purchase. If the fault could have been found and wasn't due to his failure, you are not liable. And if the fault was not known by you prior to the sale, I doubt he would prevail in court.
However, the problem you have is that this is not a simple 'claim' as you allowed him to take possession of the vehicle without obtaining full payment.... and without delivery of a valid title.
Unless this is resolved amicably, your options as I see them.. are to sue him in HIS home state for breach of contract, claiming the $700.00. He is liable to countersue for the 'damages' (unlikely to succeed) and a demand for title (likely to succeed).