Tuesday, February 11, 2014

California Water-Saving Plumbing Law Effects Investment Property Owners, Sellers, Property Managers and Property Management Companies


A California law enacted in 2009 is finally taking effect and causing concerns among property owners, sellers, buyers, and realtors.  California Civil Code Section 1101.4 requires owners of single-family residences which were “built or available for use on or before January 1, 1994” which will be altered or improved on or after January 1, 2014 to install water-conserving plumbing fixtures only when the existing plumbing fixtures are “non-compliant” by certain dates specified below.
A noncompliant plumbing fixture is defined by California Civil Code Sec. 1101.3 as:
1)    Any toilet manufactured to use more than 1.6 gallons of water per flush;
2)    Any urinal manufactured to use more than one gallon of water per flush;
3)    Any showerhead manufactured to have a flow capacity of more than 2.5 gallons of water per minute; and
4)    Any interior faucet that emits more than 2.2 gallons of water per minute.

Single-Family Residences are Required to be Compliant by January 1, 2017
California Civil Code Section 1101.4 requires that if a single-family residence is altered or improved on or after January 1, 2014, the installation of such fixtures must be a condition of the final building permit approval.  In addition, all single-family residences must generally be equipped with such fixtures by January 1, 2017.

Multi-Family and Commercial Properties have Similar Requirements for Compliance
California Civil Code Section 1101.5 states that all multi-family residential properties and commercial properties with noncompliant plumbing fixtures must comply with the following requirements.  As of January 1, 2014 all such properties must, as a condition of final building permit approval, replace all plumbing fixtures with water-conserving fixtures if:
1)    Permits are obtained to increase the floor area of the building by more than 10%; or
2)    Building alterations or improvements exceed $150,000 in costs; or
3)    Permits are obtained for a room with plumbing fixtures.
In addition, by January 1, 2019, all multi-family and commercial properties must comply with this law by replacing all noncompliant plumbing fixtures.  Sellers of such properties must disclose to the prospective buyer whether the property includes any noncompliant plumbing fixtures.

Effect on the Transfer Disclosure Statement (TDS)
A disclosure relating to this new law was added to the California TDS in the form of a check box on page one where a seller must disclose whether the property has water-conserving plumbing fixtures or not.  As of now there is no requirement for the entire property to be compliant unless a triggering event occurred prior to sale, thus, the TDS has an explanatory note on page two: http://www.car.org/legal/disclosure-folder/water-conserving-plumbing-fixtures/

What This Means During a Sales Transaction
Because the law does not fully require all properties to be fully compliant each seller, buyer, real estate agent, and property manager must fully understand the details, the deadlines, and the nuances of this law.  If a seller checks the “Water-Conserving Plumbing Fixtures” box on page one of the TDS that does not mean that all of the plumbing fixtures are compliant.  Thus, it is imperative for each seller, real estate agent, and property manager be fully aware of the deadline dates and the details of this law such that a proper disclosure can be made to a prospective buyer.
It is also a prudent practice to provide a prospective buyer with an Advisory or a disclosure representing the law (California Civil Code Sections 1101.1 through 1101.9) and the information available to the seller and/or the seller’s agent when entering into a sales transaction with a prospective buyer.  It is also prudent to recommend that prospective purchasers consult with a competent California Real Estate Attorney prior to purchase.  Professional property managers and property management companies must be mindful of this law to prevent the temptation of having work or repairs performed which do not comply with the new law.

Local Jurisdictions May Adopt Stricter Requirements
Finally, California Civil Code 1101.8 allows local jurisdictions like cities, counties, and towns to adopt stricter requirements.  It is important to stress the possibility that local ordinances and laws may be stricter than California law and as such each prospective purchaser should also check with the local building department or community development department for the latest local plumbing requirements.  Property managers who manager multiple residences for their clients should be out front on this new law as they are typically involved in the renovations and remodels of these types properties.

Real Estate Attorneys Can Help Property Owners in these Situations
Property management companies fortunate enough to have a real estate attorney available can help owners and sellers in these circumstances.  A real estate attorney typically has the training, expertise, and procedural knowledge to help keep owners and sellers abreast of these changes in the law which seemingly occur each and every year.