Some neighborhood associations will fine you if you DON'T pick up your dog's shit.
My mom has a baggy carrier attached to her leash so when her dog goes, she just picks it up and throws it away in the trash can.
No big deal. No worse than changing a diaper.
I don't know what the rules are in your area, but bring it up to your neighbor. I don't know why he would let his dog shit in YOUR yard anyway. Why didn't he walk his dog in his own yard?
