Water Line Problems

I have a couple of problems that came up with my water line. I live in Portland, Oregon.
I bought a house in July of 2000. Next door to our house there was an empty lot that was part of the same property as my house when it was built, and was owned by the woman I bought my house from, but was made into a seperate lot at some point in the past. The man who bought it started building a house on it in October. While they were digging they discovered that our water line crossed their property. What actually happened is the builders broke the water line, patched it, and didn't tell us about it. My husband and I found out what happened when we called the owner of the property because we had almost no water flow and mud coming out of our pipes. The owner of the property then said we had to move the water line and he would do it for $500. We agreed to this and then waited another 4 days until we had water. Since then one of our toilets hasn't worked. There is mud in it and no water flow to it. I told the builder that he needed to fix our toilet before I would pay him, he told me it wasn't his fault but he would pay for an hour of a plumber's time. I thought that was reasonable so I sent him $300 and told him I would pay the rest when our toilet was fixed. That was in November and I hadn't heard from him. He has also driven a bulldozer about 8 feet into our property without our permission and turned our lawn into mud.
I called the water bureau to find out why our water line was across their property, what that meant, and who was responsible for it. She told me that it should have been disclosed when we bought the house that we didn't have legal access to our water, and that it should have been fixed when the two lots were split up to be sold. I talked to my realtor and he said it's just one of those things and there is nothing he can do.
I would like to know what the deal is here, both with the water and with the builder. Whose responsibility was the water line thing? What can I do about this builder? I want him to fix our toilet and restore our lawn. I don't know what my rights are here. Help Please!

[HomeGuru]

1) seller is guilty for non-disclosure of a material fact.

2) builder is guilty of trespassing and lawn damage, and plumbing problem.