The usual way to accomplish your purpose is to grant a revocable license to use the area for the stated purpose. This does not burden your title and it prevents you from later having to defend an adverse possession claim. The terms of the license should protect you from liability as owner of the area, can provide for payment to you, (You will continue to pay tax on the land and you will not be able to use it while the license is in effect.) and often contain other terms.
You can do one of two things. You could give your neighbor an easement in gross which allows your neighbor alone to use the drive. That involves granting and recording an easement. Alternatively, you can grant your neighbor a license, which again is personal to your neighbor. You may prefer the license as it is revocable.
Although an oral license is valid, I suggest that you have a written license drafted specifying what you are permitting your neighbor to do. Of course, this could create a problem when the neighbor sells. Another alternative is to ask the builder to correct the issue since their is encroachment on your property.
I agree with Mr. Koler. The term “license” is generic in nature, but there may be other, more specific names, for the particular document that you envision, including a “permissive use agreement,” among others. From your perspective, a license may be a good option here because it is not an interest in land, and is merely a privilege that is revocable at will by you, the licensor. Moreover, licenses are personal to the licensee, and not subject to assignment (i.e., the license would not automatically pass to your neighbor’s successor in interest if he or she were to sell their home.). For these same reasons, however, from your neighbor’s perspective, a license may not be a good option because it doesn’t provide much certainty and might complicate his or her ability to sell down the road.
My only hesitation regarding a license is that if a licensee invests substantial amounts of money or labor in reliance on a license, the licensor could be estopped from revoking the license, and the license could become the equivalent of an affirmative easement. Here, there might be a question whether a pre-existing driveway constitutes a substantial improvement for purposes of a subsequently drafted license. Your attorney would need to take this into account in drafting any license. Finally, it is possible that either you, or your neighbor, and/or both of you, may have claims against the builder, including a possible breach of warranty and/or contract under any applicable statutory warranty deed, purchase and sale agreement, etc. You would need to contact an attorney regarding the specifics of your case.
This answer is provided for informational purposes only and should not be relied upon or construed as legal advice or legal opinion. The answer is based upon limited facts and general principles of law, both of which are subject to change and, therefore, may materially affect any answer given. You should contact an attorney to obtain advice with respect to your particular issue or problem. This answer does not create an attorney-client relationship, nor does it create any kind of legal relationship, duty, or privilege. This attorney is licensed only in the State of Washington.