Hire an attorney ASAP. You should be certain that you have a full understanding of your rights and obligations before you do anything at all. (For example: you might not want to have a disagreement with your neighbors, but you might well do so if it meant that your lot would no longer be compliant/buildable.)
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You should let them know that your survey shows that their fence encroaches on your land and that you would like them to remove it. They are free to have their own survey done if they want, but it is unlikely that the margin of error for an instrument survey would be as much as 10 feet.