Also note that you could have trouble selling the property in the future with the fence there, because a lot of people won't want to buy a lawsuit, and this is the type of thing that can end in litigation.
One way to avoid an adverse possession claim is to make an agreement with your neighbor, in writing, signed by both of you, where it states that you are granting him, his heirs, successors and assigns (essentially, anyone who owns the property after him) permission to use the land by putting his fence there, and he acknowledges that he may never become the owner of the strip of land beneath the fence. The agreement should state that permission may be revoked in writing at any time. Make two originals, and record one with the county recorder's office under each of the properties. That puts future owners on notice. Also keep a copy for your records.
Legally, since he'll be using your land and you won't, you can also ask him to pay for the right to put the fence there, but that's between the two of you.
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