How can my sister work with a stubborn neighbor to improve her own property?

My sister, in another state, purchased a piece of distressed real estate which is, essentially, the shell of a duplex house which she will renovate and upgrade to a single-family dwelling ready for occupancy, and then resell. She’s obviously hoping to flip the house for profit over a short term. (She tells me that aside from the fact that it had already been gutted and more or less abandoned, it’s a beautiful structure, and the improvements that she plans will make it look even better outside than it does now, which is “not bad”.) She has a fair amount of experience in doing this, so this is not her first endeavor of this type.

But here’s the problem: Over time, and perhaps as long ago as fifty years or more, the neighboring property was broken up so that her new house has a zero-line with the neighbor’s property. That is, his property exactly abuts the foundation wall of her house. That wouldn’t be so bad, except he has refused to allow her to even step onto his land to make necessary repairs to her foundation (mostly cosmetic) and to upgrade the siding on that side of the house. And he has been energetic in enforcing his refusal.

It turns out that he is a landlord, and that he doesn’t even live in the house next to hers. He rents it out to a family that my sister says is very welcoming (they bring her construction guys doughnuts every day), but he himself has a friend who drives by several times a day and if he even sees anyone approaching the property line he tells them, “Cross the line and you’ll be arrested for trespassing.”

I’ve suggested to my sister that she could probably make any legal agreement with the current tenants to perform her work – as long as they don’t violate any lease agreement – and the property owner would have no recourse. (This assumes that the tenants are current with their rent payments, legally occupying the house and that there is no lease restriction against allowing neighbors onto the lawn.) But she’s reluctant to involve the tenants because that could put them in bad with their landlord and he could then turn around and make life difficult for them.

Apparently this is a new thing to the town’s Building Department; they didn’t know that such a condition existed and don’t have any advice on how to handle it. (Of course, this is the same Building Department who refused to give her a building permit for two days because they said “the house has to be in livable condition” – but it had no furnace and no running water, so without repairs it could never be “livable”, and without a building permit that condition could never be remedied. It actually took them a couple of days to realize that error in logic.)

What would you do or suggest?