Advice on Property Boundary Issue

[Terence Zhao]

I have a home that I'm looking to add a bathroom addition. The city noticed an issue with my property boundary line - it runs partially through the northeast corner of my house and into where I'm planning to build my bathroom. I hired a surveyor to double check and he confirmed that is indeed the case. Attached will better illustrate what I'm talking about. I purchased this house 5 years ago and was not aware of this until recent. The surveyor said our neighbor's and our lot might've been one lot in the past and when they divided the lot, the boundary was not set correctly. Any recommendations on how to resolve a matter such as this? 

[Tom Gimer]

@Russell Brazil I'd buy the land inside the fence that everybody has been observing as the actual boundary...

...after first evaluating whether or not there could be an adverse claim to it.