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Selling a car, even as a private party, should not be an exercise in utilizing every loophole in the law to scam as much money as possible out of the purchaser, then walk away with the money claiming caveat emptor.
You did the right thing, and retaining $300 for your trouble was more than fair.
Whether you fix the supposed problems before you resell, or disclose them to the next buyer is up to you, but in any event you will have a clear conscience.
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