I don't know what the laws are where you are, but where I live you are not allowed to channel water to someone else's property. It must exit your own property to the street. I agree with Yardvaark. It sounds like you need to research where the city planners designed the water to go and find out why its not going there. Its not hard to find that info. The city should be able to give you the development plan for your subdivision. Our city worked with us to help us solve the problem we had. I was told that just after the subdivision was built some neighbors further up the hill from us had similar issues to you. The city had to come in and build a storm drain through at least 2 of the lots to solve the issue for them. If you were not having these issues before your neighbor built his pool and garage then it sounds like you need to bring the issue up and demand it be solved. If it had happened to us and the city and homeowner weren't helpful in solving the problem we'd be suing both of them for not addressing the issue of drainage and recouping the cost of having to pump all that water out. In my son's old neighborhood the one house on the corner that was the lowest and kept getting flooded year after year was finally purchased by the city, torn down and a small park sits there now. But it took a long time for that to happen. I don't know for a fact, but I suspect law suits were involved. - In the link below I show how we solved our problem. But we really didn't have much issue with neighbors' lots draining into ours it was that our lot wasn't graded correctly in the first place and the water had no outlet to exit our property. Good Luck and please report back what happens. Here is a link that might be useful: Back yard drainage

I'm redoing my yard to fix a drainage issue... so I can offer a little help. Topsoil won't help... rain will soak through the topsoil, hit your clay and make the topsoil soggy. The builder put a dry well in what appears to be clay soil? I wonder if he knew what he was doing? Dry wells are for good draining yards... as you can see you don't have a good draining yard lol. You sure it's a dry well and not an outdoor sump pump that failed? If you recently bought it... the builder should stand behind his work. How far away is the street from this spot? Is it slopped down hill to the street? A french drain is all you need... I built one 100' long last month. It only took a couple days digging by hand... but made a huge improvement. but in order to get that water to the street... you have to design it so the water can run down hill. If it doesn't run down hill.... you may just want to create a french drain and hook it into your downspouts. It'll take care of that problem quick.

That water either needs to soak into your soil or drain off. The reason it smells is the water cuts off the availability of oxygen to the beneficial (aerobic) soil microbes and they are now dead and stinky. What will happen in that spot is the vegetation will transform from turf type to swamp type grasses. I have been in a home for nearly 2 years and just this month noticed I have the same problem. We got 3.5 inches of rain over 2 weeks ago and I still have 1 inch of standing water out in the north corner of the lot (I don't get out there much). You can dig a trench to a collection point that is lower or you can fill it in and let the water drain to another collection point. Ideally that collection point would be a legitimate drainage point like a gutter in front of your house. What I am going to do is spray the area with shampoo. Shampoo will help the water drain into the soil. When that does not work, I'll carve a swale out to the ditch (no curbs in the country) and let it drain that way. My property is raised above the road and has good drainage down the hill.

On a good day I would go out sit down in the middle of the yard and determine exactly where the water should go. Note the high spots and the low spots. Based on this survey of your back yard you can then come up with a plan to get rid of the water. I can not tell exactly from the picture but it looks like you have two trees in your yard. Picture I and III look like one tree and Picture II looks like the second tree. The second tree appears to be on the high side of your yard, It looks like there is a high spot that creates a dam that causes water to back up on your paitio. If you remove the dam, that may correct your problem. This could be done by remove the sod through the area, taking out the dirt until you are sure that the water will drain from the patio, and replaceing the sod. You must consider the thickness of the sod when you are removing the dirt. As I start the message I would sit on the ground and understand the highs and lows in your yard before I did any thing. As a last resort, you could take your problem to the town board, ask they help. My brother in law's neighbor is currently under orders from the town to fix a drainage mess he created.