In reply to JJL:
I don't know what sort of surveyors you have used in the past, but party wall surveyors are generally a different breed to say your average mortgage company surveyor and a lot more professional and competent. Certainly option 3 is the best option to protect YOUR interests. Ask around locally for recommendations for good party wall surveyors or contact the RICS.
Option 2 would be a lot cheaper for your neighbour, so will help generate goodwill with them. The downside that it could cause problems in the event of a conflict of interests arising. If you take this route, have a joint preliminary meeting with your neighbour and the surveyor and ask him/her how they would deal with such an eventuality?
Option 1 Unless you have a sound understanding of the Party Wall Act/ building construction/services etc. I would suggest this is a risky route. It's a bit like acting for yourself in a court appearance. You know the old saying for that? "The person who acts for himself has a fool for a client"
As you say the Law firmly supports you if you chose option 3 and your neighbour bears the costs.
Post edited at 09:54