I had a an interesting run in with this issue a while ago. I had a '78 jazz bass that I bought on ebay but then decided to sell because I didn't really dig it. The auction ended and the buyer contacted me to tell me that he would be coming from boston to new york anyway, that he would be renting a car and would come by to pick it up in person and give me the cash. I told him I had to leave for a gig by by 6:00. He says he'll get there by 4, then shows up an hour late in a giant rented SUV, comes up to my apartment in brooklyn, then announces that he's not there to pay me, he's there to take the bass that was stolen from him and is rightfully his, and that he's got pictures to prove it. My wife and I tell him that stolen or not, he's come into our house under false pretenses and tell him to leave. It occurred to me that we'd let a stranger into our house and he wasn't acting completely stable. He leaves, then calls the cops. They show up, he shows them pictures of him playing what looks like the bass I was selling, as well as a sales receipt from a boston music store, but the serial number was off by one number. The cops tell him they can't confiscate it from me based on what he has shown them, but if he presents compelling evidence that it is his, they will be able to confiscate it from me and he will then be given a chance to prove it is his before a judge, at which point the bass will be either handed over to him or given back to me. He finally leaves, and I leave for my gig, not in a very good mood.
the next day he calls me to apologize for how he handled the situation. I tell him I understand, that people get irrational when it comes to instruments and that I believe that it the bass was stolen from him and offer to sell it to him for what I paid for it (far less than my ending price on ebay). He says, no by law it's his and he shouldn't have to pay me for it, and he intends to get a "correct" receipt, have the police confiscate it from me and then prove in a court of law that it's his. Out of principle. Keep in mind, he'd already spent hundreds of dollars to rent a car and drive to new york on his botched hijack rescue mission. Months go by, I call the guy a few times, never hear back. I call the police at the local precinct who know about the case and they say that since the guy hasn't taken any further action and I've made a good faith attempt to work with him and contact him to go ahead and sell the bass again. I call him one last time, leave him a message letting him know I'm moving on with selling the bass. I went ahead and traded it for the '70 M-85 II that I now currently own. All's well that ends well, but I hope to never go through that again.