We just discovered that the cause of some water staining on the internal sill-plates on top of the basement foundation wall are due to the outside grade sitting ~2 inches above the foundation wall!! See picture below (our house on right).
A waterproofing guy (who does internal drain systems) suggested we build a rock/brick retaining wall, dig down about 1 foot below the foundation wall, put in retaining wall, and fill with rock up to a few inches from the top of the retaining wall.
Sound reasonable? Given the proximity of the neighbors home in the picture (slab on grade), is there any risk of destabilizing their foundation by putting in a small retaining wall (~18 inches high) about 2 feet away from the cement sidewalk in the picture?