Water Submetering for Condos and HOAs

Why Condo Water Is a Different Problem

In an apartment building, the owner pays the water bill and decides how to recover it from tenants. In a condominium, the owner of the bill is the association, and the people paying for it are the owners themselves. Many older California condominium projects were built with one master water meter. The water purveyor bills the association, the association pays it from the operating budget, and each owner funds a share of that budget through regular assessments, whether they live alone and travel for work or share a three-bedroom unit with a family of five.

That arrangement is simple. What usually changes the conversation is a steep rate increase, a budget review, or an owner asking, reasonably, why they are paying for a neighbor's garden hose. Per-unit billing answers all three. The legal framework, though, is not the one most submetering material describes, because most of it is written for landlords.

Why SB 7 Does Not Govern the Association

SB 7, enacted in 2016 and operative January 1, 2018, is California's water submetering law for rental housing. It sits in the Civil Code at §1954.201–.219 and sets detailed rules for landlords who bill tenants separately for water: what a bill may contain, how fixed charges are split, a capped administrative fee, late-fee limits, leak credits and a pre-lease disclosure. Our apartment communities guide walks through all of it.

None of that binds an association billing its members. The statute defines "landlord" as "an owner of residential rental property," and then says expressly that the term "does not include a common interest development" (§1954.202(b)). An HOA passing water costs through to owners is not a landlord under SB 7, so SB 7's billing formulas, its $4.75 CPI-adjusted fee cap and its late-fee schedule are not the rules that apply to the association's bills.

This does not mean SB 7 is irrelevant to a board. Its standards — bills showing beginning and ending reads in gallons, meters the resident can read, a defined leak response, records on request — make a good template for a board's own program. The board just isn't obliged to follow them.

What Does Govern: Davis-Stirling and Your Governing Documents

California common interest developments are governed by the Davis-Stirling Common Interest Development Act, Civil Code §4000 and following. We found no provision in the Act written specifically for water submeters. The rules that matter are the general ones on assessments.

Subdivision (b) is the practical guardrail. Whatever structure the association adopts, water charged back to owners should add up to what the association actually pays for that water, not more. Think of it as pass-through at cost. A per-unit charge that recovers the purveyor's bill, split by measured usage, fits that principle comfortably. A charge padded with a margin does not.

Subdivision (a) points to the other half of the question: the governing documents. Your CC&Rs and bylaws define what the association's obligations are, how common expenses are allocated among separate interests, and what the board may do on its own authority. The allocation formula for assessments is often written into the CC&Rs themselves. If yours say common expenses, water included, are shared by a fixed percentage per unit, moving water to a usage basis may mean changing that allocation.

Board decision or membership vote?

This is the question every board asks first, and it is the one we can answer least in the abstract. It depends entirely on how your documents are written: what they say about utilities, how they allocate common expenses, and what they require to amend either. Some associations may find their documents already give the board room to allocate utility costs by use; others will find the allocation fixed in the CC&Rs, where changing it may require an amendment. Check your governing documents and your association's counsel before you commit.

Per-Unit Usage Charges and Regular Assessments

Once an association meters each unit, it has to decide how water appears on an owner's statement. Broadly there are two designs, and your documents and counsel will steer the choice:

• Water inside the assessment. The regular assessment still covers water, but each unit's share of the water portion follows its measured use instead of a fixed percentage.
• Water as a separate usage charge. Water comes out of the budget line funded by regular assessments, and each owner receives a separate charge based on their meter.

The distinction matters for collections. Davis-Stirling caps the late charge on a delinquent assessment at the greater of 10% or $10, with interest at no more than 12% (§5650), and assessments carry the association's lien remedies. Whether a water usage charge counts as an "assessment," with those remedies, is unsettled. We would not build a program that assumes either answer. Ask counsel how your association's documents and structure affect it, and write the collection policy for water charges deliberately rather than inheriting it by accident.

Two design choices hold up under either structure:

• Keep common-area water in the budget. Irrigation, pools, clubhouses and wash-down water serve everyone. If they flow through the master meter rather than a separate common-area meter, subtract them before allocating anything to units, and fund them through regular assessments as before.
• Decide how fixed charges are shared. Much of a purveyor's bill is fixed service and meter charges that don't change with usage. Splitting those equally per unit and splitting only the usage portion by meter is a defensible approach; it mirrors one of the options SB 7 gives landlords (§1954.205(a)(2)). Whatever you choose, write it down and apply it consistently.

Check Your Water Supplier's Rules Too

The purveyor that bills your master meter may have its own tariff rules on resale and submetering, and those apply whatever SB 7 says. Two examples:

• LADWP. Rule 18 covers water as well as electricity and expressly contemplates cost allocation among "apartment, condominium or commercial units." It prohibits resale, limits submetered charges to no more than LADWP would charge directly, bars "additional costs, fees, service charges … of any nature," including meter-reading and equipment charges, and requires allocation to charge each user for "the amount actually used." For a Los Angeles association, that means no billing fee on owners' water charges, and an allocation that follows each unit's actual use.
• CPUC-regulated water companies. Golden State Water's Rule 19, for example, prohibits resale except by special agreement or for "a mobilehome park or a multiple unit residential complex" billed at "the rate which would be applicable" from the utility. If your purveyor is an investor-owned water company, read its resale rule and confirm how your complex fits it.

New Construction: The Per-Unit Mandate

For newer buildings the question is not whether to measure each unit but how. Water Code §537.1(a) requires each water purveyor serving a "newly constructed multiunit residential structure or newly constructed mixed-use residential and commercial structure" to require "a measurement of the quantity of water supplied to each individual residential dwelling unit" where the application for a water connection was submitted after January 1, 2018.

One nuance for developers and new boards: the matching building standard, CALGreen §4.303.2, is written in terms of "rental dwelling units." The Water Code mandate is the broader of the two. If you are a board taking over a recently built project, find out how per-unit measurement was satisfied: utility meters on each unit, submeters owned by the association, or neither. The answer shapes everything else in this guide.

Owners Who Rent Out Their Units

Most associations include owners who lease their units. That raises a fair question: if an individual owner is a landlord, does SB 7 apply when that owner passes the unit's water charge on to a tenant?

For a board, the practical point is to stay out of it. The association bills owners; what an owner charges a tenant is between the owner, the lease and the owner's counsel. Tell leasing owners the question exists, and make each unit's reads and charges available to them.

Meter Standards: What "Billing Grade" Means in California

A water meter used to charge anyone for water is a commercial device under California's weights-and-measures law, whether or not SB 7 applies. Business and Professions Code §12500(e) counts any measurement "upon which … a charge for service is based" as a commercial purpose, and §12500.5 makes it unlawful to use a commercial device unless its type has been approved. That brings three practical requirements with it:

• Type approval. Only meter models approved for commercial use in California should be considered. A consumer flow sensor or a "smart home" leak monitor is not a billing meter.
• Accuracy. California applies NIST Handbook 44 §3.36 as published. For accuracy class 1.5 meters, acceptance and maintenance tolerance is ±1.5%. AWWA product standards such as C700, C710, C712, C713 and C715 describe meter construction, but they are industry standards, not California's legal test.
• County sealer oversight. The county sealer of weights and measures inspects commercial devices. For water submeters in domestic service, the inspection interval in 4 CCR §4070 is 10 years, and the state charges an annual administrative fee of $0.50 per domestic water submeter (4 CCR §4075). Counties may charge device fees as well; ask your county sealer's office what applies to your association.

Placement matters as much as the meter. Each meter should measure only the water that serves its unit, and it should be readable without entering the unit. That is SB 7's rule for landlords, and it is simply good practice for an association: no access requests, no missed reads, and an owner who can check their own meter.

The Fairness and Conservation Case

The strongest argument for per-unit billing in an association is fairness. Under a flat share of a master bill, a retired couple who water nothing subsidize a unit with a large household and a leaking toilet, and nobody can see it happening. With a meter on each unit, each owner pays for their own use. Leaks show up on one unit's reads instead of as a mystery on the association's bill.

Be precise about what that study says. It measured apartments, not condominiums, and it compared submetering against water included in rent. The closest condo analogue is water folded into assessments, where no owner sees a price signal, so the comparison is a reasonable guide to the direction of the effect. It is not a promise of a number. The study itself notes that not every submetered property used less water. Present it to members as "about 15% in apartment research," not as a forecast.

A Practical Path for the Board

1. Get the facts. A year of master-meter bills and the purveyor's rate schedule, with usage and fixed charges separated.
2. Survey the plumbing. One metering point per unit, or several risers? That decides cost and feasibility. Our meter retrofit checklist covers the survey.
3. Read the documents with counsel. Utilities, assessment allocation, and whether an amendment is needed.
4. Design the charge. Fixed charges, common-area water, assessment or separate charge, collections — with the total kept at cost.
5. Bring the membership along. Vote or no vote, owners who see the numbers are far less likely to fight the change.
6. Install and verify. Type-approved meters, read on a regular cycle, with a few months of "shadow" statements before the first real charge.

Frequently Asked Questions

Board Checklist

Sources

Accessed September 2026.

• California Civil Code §1954.202 (part of §1954.201–.219, SB 7) — definitions, including the exclusion of common interest developments
• California Civil Code §5600 — Davis-Stirling assessments and the cost limit
• California Civil Code §5650 — late charges and interest on delinquent assessments
• California Water Code §537.1, with §517, §537 and §537.2 — per-unit measurement in new construction, definitions, exemptions and installers
• California Business and Professions Code §12500.5 and §12500 — type approval and commercial-purpose devices
• California Code of Regulations, Title 4, §4070 and §4075 — inspection intervals and state administrative fees; NIST Handbook 44 §3.36 as applied in the CDFA 2024 Field Reference Manual
• LADWP Rule 18; Golden State Water Company Rule 19 — resale and submetering
• Mayer, Towler, DeOreo et al. (Aquacraft), National Multiple Family Submetering and Allocation Billing Program Study (2004)