[Big Ed]

Absolutely don't build it on her land! Then the fence is hers, and she could tear it down if she wanted! Or maybe you are over there ripping out her fence in order to replace it, let's say she decides she's PO'd and calls the cops. They come by and stop you, make you rebuild, yada yada yada. Or let's say 2 years from now she sells, new owners see that the fence is inside their line, they decide to rip it down. Chances of any of these outcomes may be slim, but you dont need to risk it. Put it on your land. She played her hand when she feigned no knowledge of English.

And, Kurt V is right, local zoning often stipulates that the attractive side face out. If in doubt, be sure to check first.