BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
Water-Conserving Plumbing Fixtures
BOTTOM LINE: Buyers should be made aware that by January 1, 2017 all single-family residences (which were built and available for use on or before January 1, 1994) must install water-conserving plumbing fixtures to replace noncompliant plumbing fixtures; and sellers must disclose whether the property has any noncompliant water-conserving plumbing fixtures.
BACKGROUND: A 2009 law calls for installation of water-conserving plumbing fixtures when the existing plumbing fixtures are “noncompliant” by certain dates, as discussed below.
A noncompliant plumbing fixture means: (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. (Civ. Code Sec. 1101.3)
I. DATES FOR COMPLIANCE:
1. SINGLE-FAMILY RESIDENCES: This means any real property built before January 1, 1994 that is improved with, or consisting of, a building containing not more than one unit that is intended for human habitation. (“SFR” here means a property meeting this definition). Therefore, a condo, even a single condo occupied by only one family, is not a SFR property under this law.
A. UNTIL DECEMBER 31, 2016: This law requires that, if a SFR is altered or improved, the installation of such fixtures must be a condition of final permit approval.
B. AFTER JANUARY 1, 2017: All SFR’s must comply with this law by replacing all noncompliant plumbing fixtures whether or not the property is being remodeled or sold. Also, starting on that date, sellers of SFR’s must disclose to prospective buyers whether the property includes any noncompliant plumbing fixtures.
2. MULTI-FAMILY AND COMMERCIAL PROPERTIES:
A. UNTIL DECEMBER 31, 2018: As a condition of final permit approval, owners must replace all plumbing fixtures with water-conserving fixtures if:
1. Permits are obtained to increase the floor area 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.
B. AFTER JANUARY 1, 2019: All multi-family and commercial properties must comply with this law by replacing all noncompliant plumbing fixtures. Also, starting on that date, sellers of such properties must disclose to the prospective buyer whether the property includes any noncompliant plumbing fixtures.
NOTE: For more details, check the law at Civil Code Sections 1101.1 – 1101.9 and consult with a qualified California real estate attorney with any questions.
II. LOCAL ORDINANCES AND INTERPRETATIONS: A number of cities are adopting the interpretation by the Contractors State License Board (CSLB) and the California Building Officials (CALBO) group of the terms “alterations” or “improvements” which would exclude certain repair and maintenance items from the requirements of this law. Specifically, they are taking the position that construction related to repairs or maintenance of the structure is not considered to be an alteration or improvement. It is important that sellers and buyers check with their local building department to determine which exclusions each particular city or county consider as being repairs and maintenance items exempt from this law.
III. DISCLOSURES: Beginning January 1, 2017 a seller of a SFR must disclose in writing to the buyer the requirement of installing compliant water-conserving fixtures and also disclose whether the property has any noncompliant fixtures.
A. TRANSFER DISCLOSURE STATEMENT (TDS): The TDS has a checkbox on the first page where a seller can disclose whether the property has water-conserving plumbing fixtures. However, the checking of this box by a seller may indicate that the entire property has compliant fixtures, or it may only mean that some of the fixtures are compliant fixtures. There is a short explanation on page 2 of the TDS as to what this means as well as a disclosure of the requirements of the law for SFR’s. As a result, the TDS does NOT meet the disclosure requirement of the law.
B. OTHER FORMS FOR DISCLOSURES REQUIRED BY THIS LAW:
1. CAR Seller Property Questionnaire (SPQ) and Exempt Seller Disclosure (ESD): With the December, 2016 forms release, the SPQ and the ESD forms contain a question asking if sellers are aware of whether the property has any noncompliant plumbing fixtures. If a seller answers “No” to that question, buyers should not assume that the property is fully compliant since the “No” response may merely mean that seller is unaware or is uncertain as to whether or not any such fixtures are noncompliant. For this reason, as a part of their inspection of properties subject to this law, buyers should be urged to have all plumbing fixtures inspected by a qualified professional to determine whether all plumbing fixtures are actually compliant with this law.
2. Other forms: In areas not utilizing CAR forms a similar question is likely inserted in the local substitute disclosure forms (e.g., the SCC in PRDS areas, and SFSD in San Francisco)
For more details on, and exemption from, this new law, go to:
http://www.car.org/legal/disclosure-folder/water-conserving-plumbing-fixtures/
PRACTICE TIPS:
1. THIS IS NOT A POINT-OF-SALE REQUIREMENT. Like the smoke alarm, water-heater bracing and carbon monoxide detector laws, which required owners of specified properties to have complied with these laws years ago, this law requires all owners of SFR’s covered by this law to comply by installing water-conserving plumbing fixtures as of January 1, 2017. Of course, most will not. So this will most often be dealt with in escrow, just as is done with respect to the other three laws mentioned above.
2. Even if a seller checks the “Water-Conserving Plumbing Fixtures” box on page 1 of the TDS, that is no guarantee that ALL of the noncompliant fixtures have been replaced. See the note at top of page 2 of the TDS which makes that statement.
3. Listing Agents: Be sure that your seller of a SFR has advised the buyer of the requirements of this law, in the TDS or elsewhere, and has disclosed whether the property has any noncompliant water-conserving plumbing fixtures. This can be done in the SPQ, ESD or a local TDS supplement document. Also, some local Disclosure & Disclaimer Advisories make this disclosure of the requirements.
4. Buyer Agents: Check the seller disclosure regarding seller’s awareness to see whether the property has any noncompliant plumbing fixtures.
(a) In light of the fact that many sellers may simply be unaware whether their property has any noncompliant fixtures, it is prudent to discuss with your buyer whether that information is important to them. If so, recommend that they have the property inspected for noncompliant fixtures by a qualified professional. This may be a home inspector who is qualified to do so, but it may require an inspection by a plumber.
(b) If it is determined that the property has noncompliant fixtures, this can be addressed in a request for repair or credit if the buyer wishes to negotiate this with the seller.
(c) If your buyer does not receive a disclosure regarding this new law from the seller/listing agent, then it is a good idea to make sure that your buyer does know of the law so as to make a decision about checking for noncompliant fixtures and perhaps seek a credit from seller. That disclosure to your buyer can be in a local Advisory, or you can use the one on the last page of this Tip.
5. Because this is not a point-of –sale requirement, it is not a requirement of the law that compliant water-conserving plumbing fixtures be installed throughout the property at close of escrow. However, buyers may want to know if the plumbing fixtures are compliant because:
(a) If buyer applies for a permit, the city/county inspector will require the property be retrofitted with water-conserving plumbing fixtures as a condition of the permit; and,
(b) When buyer sells, buyer (now seller) will have to disclose to their buyer whether the property fixtures are compliant.
6. CAR Residential Purchase Agreement, Paragraph 7.B(2): This paragraph, which designates whether seller or buyer will pay for compliance with minimum mandatory government (i) inspections and reports and (ii) retrofit standards, does NOT apply to replacement of noncompliant fixtures because those paragraphs only apply to compliance “required as a condition of closing under any law.” And there is no such requirement in this law.
WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip Practice Tip is for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.
© Copyright Broker Risk Management 2016 11/04/16
FORM FOLLOWS BELOW:
(Insert Broker Name)
WATER-CONSERVING PLUMBING FIXTURE
DISCLOSURE AND ADVISORY FOR SELLERS AND BUYERS
Water-Conserving Plumbing Fixtures
Existing law calls for installation of water-conserving plumbing fixtures when the existing plumbing fixtures are “noncompliant” by certain dates, as discussed here. A noncompliant plumbing fixture means: (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. There are various dates for compliance:
SINGLE-FAMILY RESIDENCES: Under this law, a condo, even a single condo occupied by only one family, is not a single-family residential property. Until December 31, 2016, if a single-family residence is altered or improved, the installation of such fixtures must be a condition of final permit approval. However, after January 1, 2017, all single-family residences built prior to January 1, 1994 must comply with this law by replacing all noncompliant plumbing fixtures whether or not the property is being remodeled or sold.
Commencing January 1, 2017, sellers will need to disclose to buyers (in either the Seller Property Questionnaire (SPQ), Exempt Seller Disclosure (ESD) form or other disclosure form), if sellers are aware of whether the property has any noncompliant plumbing fixtures.
If a seller answers “No” to that question, buyers should not assume that the property is fully compliant since the “No” response may merely mean that seller is unaware or is uncertain as to whether or not any such fixtures are noncompliant. For this reason, as a part of their property inspection of properties subject to this law, buyers are urged to have all plumbing fixtures inspected by a qualified professional to determine whether all plumbing fixtures are actually compliant with this law.
MULTI-FAMILY AND COMMERCIAL PROPERTIES: Until December 31, 2018: As a condition of final permit approval, owners must replace all plumbing fixtures with water-conserving fixtures if (1) permits are obtained to increase the floor area by more than 10%; (2) building alterations or improvements exceed $150,000 in costs; or (3) permits are obtained for a room with plumbing fixtures. After January 1, 2019: All multi-family and commercial properties must comply with this law by replacing all noncompliant plumbing fixtures. Also, starting on that date, sellers will need to disclose to the prospective buyer if seller is aware whether the property has any noncompliant plumbing fixtures.
There is no requirement in the law for sellers to install these fixtures as a part of the sale.
SELLER: _________________________________ Date: ______________, 201__
SELLER: _________________________________ Date: ______________, 201__
BUYER: _________________________________ Date: ______________, 201__
BUYER: _________________________________ Date: ______________, 201__