I agree with checking with our local code. If you are just trying to contain your dogs, t-posts and square wire will work - it works here in the country with barbed wire and cattle! However, if your local zoning regs don't allow that type of fence (square wire, not barbed
) then you may have to grin and bear losing the use of a strip of land. Chain link might work too, don't know how it would stand up to the water. But country fences go right through waterways and sometimes even ponds. T-posts aren't that hard to replace when necessary either.
My town has a 5 ft setback requirement along the alley, and my awful neighbor has destroyed the berm behnd my fence by deliberately driving within an inch of the fence to turn into his garage. The whole reason I put up the fence was to keep them, their vehicles, children, fireworks,golfballs,and dogs out of my yard. Pre-fence, he could make it into his garage just fine without driving up onto the berm. Go figure.
Also, be sure you know where your property line is. Do you have survey pins to go off of? If your neighbor is truly of the bad neighbor variety, you might find yourself hauled into court to move your fence and you'll need a survey to back you up.