This happened to a friend of mine in Florida. I don't know where you are and this may not be applicable to you though.
My friend's yard was not very level and one day he saw big trucks were hauling dirty away from a nearby road construction site. He asked the drivers if they could dump some dirty in his yard and the drivers were more than happy to do that, and for free! So he got 6 truck-loads of dirty in his yard and was very happy. But, before he could spread the dirty out, some county officials showed up. They accused him of breaking county development and planning codes and environment protection codes. The officials said his action would change the overall flooding-prevention system in the area and would have unfavorable impact to the local ecosystems. They said it's a good thing that the dirt has not been spread out, otherwise, they could fine him for thousands of dollars! And in the end he still had to pay >$500 to get the dirt hauled away from his yard.
So, I would suggest that you call your city and/or county before you do anything. Good luck to you AND to your neighbor!