RES exam question on Torts, Mortgages & Co-ownership: A valuer negligently over-values a property in a report that he knows a lender will rely…

A valuer negligently over-values a property in a report that he knows a lender will rely on to grant a loan. The lender relies on it and suffers loss when the borrower defaults and the security proves inadequate. What is the valuer's likely position?

1. ANo liability, because only a party to a contract with the valuer can ever sue him over a careless valuation report
2. BLiable only if the lender proves actual fraud, since an honest but careless valuation is not actionable
3. CNo liability to the lender; the defaulting borrower alone is liable for the whole shortfall on the loan
4. DLiable for negligent misstatement: he assumed responsibility and the lender reasonably relied to its loss