Real Estate Law
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As long as you don't actually allow your fence to cross over the boundary line onto the neighbor's property, then you can put the fence right up to the line. But if you cross that line, just a fraction, that would be an encroachment and legally a trespass to the neighbor's property and they could take legal action to force you to remove it.
So it is best to give up an inch or so of land to ensure that your fence doesn't cross over onto the neighbor's property.