Personally, I'd let the potential new owner know of what happened..

Break it down to him everything that was talked about...

TM domains are sold daily. I would make sure the new owner is well aware of the domain and the potential problems. Make sure to get a signed contract of the final sale and what was transfered etc. If the domain is doing the car company good, I don't see the problem, unless you are profitting directly from their TM.

TM's are always hairy, so use caution...

Right, good call. Its not like there is a pending lawsuit on it. I will let him know what is up. Would I want to write a contract up stating that he knows the history and that I am not liable? Or...?..

Most likely. Otherwise if later down the road he is approached by the company and loses the domain or is sued, he might be able to come after your for damages claiming that you sold it to him without informing him of the already existing possible legal issues. Though I guess that if it's an obvious TM, then the buyer should probably already know the deal.....

This would only protect you from the buyer coming after you. The TM holder could still come after you if they wanted, but it is unlikely they will. Just didn't want you to think you would be completely in the clear...

Thanks guys, that is great advice. Almost wish the manufacturer would just pay me at least what I bought it for and move on. I dont want the name anymore. But it is a great name. They had to have paid a ton of money to just have that lawyer contact me a year ago, why not pay a small portion of that money to me and just be done with it?.

Interesting thing is, after this happened, I researched the domain name and they had done this with the previous 2-3 owners, but never took the domain name off the market. They just waited for me to pick it up, and NOW they want to take it off the market.

Well, at least they tried. Like I said, I have not heard from them for a year...