It's a little hard to follow what you're saying because you keep using the word "neighber". I assume that you're really talking about your neighbor's boyfriend. It sounds like he's got a mean streak in him and holds a grudge. It could be that his girlfriend will get sick of him and give him the boot, but I wouldn't count on it.
First you have to separate the dog incident and the building. The thing with your dog tells you what sort of person you're dealing with, but it's over and there's nothing to be done.
The building encroachment is a whole 'nother thing. If the building is truly on your property, you could lose some of your land through adverse possession. So you need to do something about it, but be careful because you now know the boyfriend is a nastly little *&#! and there's no telling what he might pull. You may have to go to court to get the building moved, but I think you have to do it. I would check with the building department and figure out which regulations they've broken. If the building required a permit and they didn't get one, that's one violation. If there's a local setback requirement, then that's a second violation. Push the building department to do their job, but take them to court if you have to.
Is there a chance you can talk sense to the girl? If you think you can, volunteer to help them move the building off your property. Chances are she will be around longer than the boyfriend, so if you can work things out with her that would be better.
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