[Owner NJ-USA] Illegal landlord turned legit causing problems

For a little backstory, my parents have lived in our home for more than 25 years- for most of which, we had a multi-generation black family living next to us until they sold their house a couple years back. The property ended up getting bought by a family who moved here from China. After buying the house they lived here for 1 year until the husband moved back to China, their kid went to college, and the wife started coming back every once in a while to take care of the house. Soon after this we noticed the wife was renting this house out room by room including the basement. We knew they she was not registered as a landlord but didn’t say anything because she was renting to students at the local university in our town, generally nice, and a fine neighbor. For the past 2 years she has not done well to take care of the property, leaving grass unkempt etc. When my parents approached her nicely to remedy this, she became very confrontational and non amenable to our requests. Fast forward to a few weeks ago, my parents called the township to ask whether she was legally renting the house to which they replied no (tenants have been in the house the whole time). Now that she has to legally comply to whatever landlord regulations there are but has erected a shoddy fence in (our driveway) which connects our two properties. The day she did this she sent my dad a message “I understand you have a problem with my rental business so I have put up this fence to separate our two properties to cause less conflict”. To be clear, we have never had a problem with her renting, only with her being a bad neighbor and landlord. Even though technically the partitioned area is her land, we have kindly asked her to remove the fence because it is gaudy, in the way, and generally just not neighborly thing to do. To this, her only responses have been “its within my legal rights to put up a fence” xyz, kind of language basically telling us to shove it and completely ignoring the neighborly aspect of our request. My question to this sub is basically, if she continues to be an annoying neighbor, is it now too late to report her for having rented illegally in the residence for multiple years? I am considering threatening her with this action and not necessarily going through with it but the audacity she has to be a horrible illegal landlord and then become intolerable once she has to make her “business” legal is just crazy to me. I would really appreciate any advice this sub has on the topic, thanks!