Do all of your 'hard scape' stuff first then sod. Looks like the walls need cleaning or redone. Do you plan on removing the 4x4s in the ground if so, do it now. Take into account which way the water runs when it rains. You DON'T want it headed towards the house so add or move the soil to correct.

Maybe remove the old sidewalk and put in nice looking stepping stones down the center or leave enough room for plants next to the walls.

You might also install some heavy duty, pressure treated, lattes across the top of your rear wall so a vine could grow through it. A couple nice Clematis should work (get the correct type as they vary as to how and when you prune them). Of course a nice climbing rose (thorn-less) would look great.

Thanks for the input. There's a lot of potential in our little yard - more potential than in our bank account! I'm probably going to get the walls pressure cleaned, then focus on turning the patch of dirt into a lawn. The guy at our local nursery suggested: (1) cleaning everything out of the dirt until it's level, (2) spraying some weed and grass killer, (3) waiting a bit, (4) putting down a layer of dirt, and (5) laying some sod. I think that's workable. The drainage situation isn't a problem.

I know it may come as a surprise to many, but to have a lawn this size in the fifth-biggest city in the USA, with a tree (!), is incredible to a lot of our friends.

How much sun does the yard receive? Grass may not do well under the tree and the walls and house may shade the yard enough to make grass struggle. It's a small area. Consider mulch or ground cover around the tree with some shrubs along the wall or, like Toolbelt68 suggested, vines on lattice. If there is enough sun, you could put some sod on the part not under the tree. If it's shady, hardscape (deck, paving, etc.) would make the space more usable for entertaining. Even with no grass at all, you could have plenty of greenery with vines on the walls, shrubs, maybe a flower border, potted plants. Think "cool oasis" and relief from the summer heat if the yard is mostly shaded all day. Grass is nice but it needs sun.

One more thing: if you want to keep your tree healthy, do not add soil over the roots. A lot of the roots are close to the surface and they need to breathe. Don't cover them with too much mulch either. One to three inches of mulch is okay but no deeper. And be careful about digging and damaging the roots.

This post was edited by beckybeck on Tue, Mar 18, 14 at 16:33