Water Submetering for Apartment Communities

Why Apartment Owners Submeter Water

On a master meter, every gallon lands on the owner's bill. Submetering puts each household's consumption on that household's bill, and gives residents a real reason to fix the running toilet. California lets you do it on its own terms: Senate Bill 7 (Stats. 2016, ch. 623), codified at Civil Code §§1954.201–1954.219 and operative since January 1, 2018, unamended since 2016. This guide takes its rules in the order an owner meets them.

When SB 7 Applies

SB 7 defines "property" as "real property containing two or more dwelling units that is served by a single master meter" (§1954.202). That threshold is two units, not four. Blueline's work is usually in buildings and complexes of four units or more, but a duplex or triplex that bills tenants from submeters is covered by exactly the same rules.

Within that definition, the chapter applies to two groups of units (§1954.216(a)):

• all rental units in buildings where submeters were required by the building standard in Health and Safety Code §17922.14 — in practice, new construction; and
• "all dwelling units where submeters are used to charge a tenant separately" — any building, of any age, that chooses to submeter.

It covers nothing else (§1954.216(b)). A "submeter" is a landlord-owned device measuring the water used by one rental unit "within a multiunit residential structure or mixed-use residential and commercial structure," so apartments above storefronts are included.

What SB 7 does not cover

• Condo and HOA associations. SB 7's "landlord" is an owner of residential rental property and expressly "does not include a common interest development." See Water Submetering for Condos and HOAs.
• Mobilehome parks. SB 7 does not name them. Park residents rent a space, and the Mobilehome Residency Law carries its own water-billing rule (§798.40(c)), so parks are best treated under that law. See Water Submetering for Mobilehome and RV Parks.
• Commercial-only buildings. SB 7 covers dwelling units only. See Commercial and Mixed-Use Water Submetering.
• Older partial systems. Hot-water-only or other partial submeter systems first put in service before January 1, 2018 are exempt (§1954.217).
• Allocation billing. SB 7's billing rules apply only where submeters are used. It takes no position on ratio billing (RUBS); more on that below.

Existing Buildings vs. the New-Construction Mandate

SB 7 does not require submetering in every California apartment. For an existing master-metered building it is a choice, but once you use submeters to charge tenants, all of Chapter 2.5 applies to those units.

New construction is different. Water Code §537.1(a) requires every water purveyor serving a "newly constructed multiunit residential structure or newly constructed mixed-use residential and commercial structure for which an application for a water connection … is submitted after January 1, 2018" to "require a measurement of the quantity of water supplied to each individual residential dwelling unit."

• The trigger is the water-connection application date, not the building permit. "Multiunit" again means two or more dwelling units (Water Code §517); commercial-only units in a mixed-use building are excluded (H&S §17922.14(b)).
• Either kind of meter satisfies it. Measurement may be by the purveyor's own meters or by submeters. The owner installs and reads submeters unless the purveyor agrees to meter each unit.
• No surcharge for owner-installed submeters. The purveyor may not charge extra capacity or connection fees for them (§537.1(d)).
• Occupancy isn't held hostage. Occupancy can't be withheld while meters are back-ordered or awaiting sealer approval; they must go in within 120 days of approval (§537.2).
• The billing follows. A property required to install submeters must bill under SB 7 (Civil Code §1954.219).

The statute also sets who may install submeters in new construction (§537.1(c)(3)): "A contractor licensed by the Contractors' State License Board who employs at least one journey person who has graduated from a state-approved apprenticeship program," or a service agency registered with the California Department of Food and Agriculture. No particular license class is named. Ask any installer which test they meet.

What You Must Disclose Before Billing

Before a tenant signs, §1954.204 requires a written disclosure in at least 10-point type. It can sit in the lease itself. It must include:

• that water is billed separately from rent;
• an estimated monthly bill, based either on comparable units over any three of the past six months or on a family of four using about 200 gallons a day, with the statement "the average family of four uses about 200 gallons of water each day";
• due dates and how to pay;
• a mailing address, email address and toll-free or local phone number, with hours;
• the only charges that may appear on the bill (next section);
• the tenant's duty to report leaks, the contact for reporting them, and the landlord's duty to investigate and repair within 21 days or adjust the bill;
• that on request the landlord will provide the submeter's location, the bill calculations, and the last and next certification dates;
• the dispute path: to the landlord in writing first, then to the county sealer, with the sealer's contact information;
• a reference to Chapter 2.5 of the Civil Code.

Adding water billing to an existing tenancy

SB 7 has no procedure for converting a tenancy already in place. Its disclosure duty attaches "before executing a rental agreement," so the clean moments to introduce separate water billing are a new lease or a renewal. Changing the terms of a lease that is already running is a question for that lease and for your local rent rules, not for SB 7, so take it to counsel before you send anything to residents. Two more points to know: tenants' SB 7 rights can't be waived, and any waiver is void (§1954.215); and local ordinances adopted before January 1, 2013 still apply (§1954.214).

What Goes on the Bill

Section 1954.206 sets the contents:

• the meter read within three days of the same point in each billing cycle;
• beginning and ending reads with their dates, and consumption in gallons;
• each charge, and the volumetric rate applied;
• prior balances, any late fees, the total, the due date and when late fees apply;
• a contact for questions, and the name of any billing agent;
• a statement that the landlord or agent "is not the water purveyor," naming the purveyor;
• a contact for reporting leaks.

Tenants may opt in to e-bills but can't be required to pay electronically, and disputes must be answered in writing on request. Within seven days of a request, the landlord must produce the records behind the bill (§1954.209): test dates, the master-meter and other water-service bills, the unit count, per-unit rates, the formula and the submeter's location.

An unpaid final bill may come out of the deposit if the bill is attached (§1954.207). When a read is missed, §1954.212 sets the charge at 75% of the unit's three-month average, or $0.50 a day with no history, and to nothing at all after six months without reads.

What You May Charge, and What You May Not

Section 1954.205(a) says the bill may include "only" four kinds of charge. "Water service" is broad here: it includes "water, sewer, stormwater, and flood control" charges, whether the purveyor bills them, they arrive on the tax bill, or someone else charges them. Sewer is billable under the same rules as water.

Civil Code §1954.205(a). The bill may also carry rent and other lawful charges (§1954.205(c)).

There is no markup. Usage and fixed charges equal the purveyor's; the capped fee is the only addition. And the landlord may not pass through the purveyor's deposits, disconnection or reconnection fees, late fees, or penalties assessed on the landlord, unless a penalty was caused primarily by tenants violating water-waste rules (§1954.208).

Late fees and collection

Under §1954.213, a late fee may be charged only once 25 days have passed since the bill was sent. It is capped at $7, then $10 on each later bill, and late fees may not exceed 10% of the unpaid amount in any 12 months. Water charges "shall not constitute rent." A landlord may serve a three-day notice to perform or quit only once the bill has gone unpaid for 180 days or reaches $200 or more.

Your water provider can change the fee answer

SB 7's billing fee is not safe to assume everywhere. If your building is served by a CPUC-regulated water company, Public Utilities Code §2705.5 and tariffs such as Golden State Water's Rule 19 condition apartment submetering on charging "the rate which would be applicable" from the utility. Whether SB 7's fee can be added on top is unresolved for apartments, and LADWP bans fees outright (below). Price your program so it works without the fee.

Meter Standards and Accuracy

A water submeter used for billing is a commercial measuring device. 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 such a device unless its type is approved. SB 7 adds its own requirements (§1954.203):

• the meter is type-approved and "inspected, tested, and verified for commercial purposes";
• it is installed and maintained under the regulations adopted through BPC §12107;
• it measures only water for that unit's exclusive use;
• it is readable by the tenant, and by the landlord without entering the unit (meters installed before 2018 may be read by entry with notice);
• it is "reinspected and recalibrated within the time limits specified in law."

The technical standard is NIST Handbook 44, §3.36, adopted by reference. California's own water-meter modification has been repealed, so the handbook applies as published. For accuracy class 1.5, the acceptance and maintenance tolerance is ±1.5%. At minimum flow, meters other than multi-jet may over-register by up to 1.5% or under-register by up to 5.0%; multi-jet meters are held to 3.0% either way. AWWA product standards describe meter types, but California's legal test is type approval plus Handbook 44.

County sealers enforce this. A domestic-service water submeter is on a 10-year inspection interval (4 CCR §4070). The county device fee for apartment-complex water submeters is at most $6 per device (BPC §12240(g)(1)(A), a section that sunsets January 1, 2029), plus a state administrative fee of $0.50 per domestic water submeter each year (4 CCR §4075). The water purveyor has no compliance duty for your submeters. SB 7 does allow entry, under the ordinary rules of Civil Code §1954, to install or repair a meter or fix a leak (§1954.211).

Leaks and Repairs

SB 7 has no penalty section; its enforcement is the deemed-usage caps in §1954.210:

• When a tenant reports a leak, the landlord must investigate and, if warranted, repair it.
• If the repair comes more than 21 days after notice, the usage charge is deemed to be the lesser of $15 a month or actual use. At the landlord's option it can instead be $0.50 a day between reads.
• If the problem is still unrepaired 180 days after investigation, no usage charges may be billed at all until it is fixed.
• None of these adjustments applies if the tenant denied access.
• Tenants may not remove water-saving devices the landlord installed.

A slow maintenance queue costs you that unit's water bill, so put leak reports in the same work-order system as any repair, with the 21-day clock visible.

RUBS as an Alternative

Ratio utility billing, which splits the master bill by formula, is defined in SB 7 (§1954.202(d)) but not regulated by it: "Nothing in this chapter shall be construed to apply or create a public policy or requirement that favors or disfavors the use of a ratio utility billing system" (§1954.216(c)). SB 7 neither permits nor bans RUBS. Whether RUBS is lawful for your building depends on other law:

• CPUC-regulated water companies: tariffs such as Golden State Water Rule 19 allow resale only as submetering at the utility's own rate, which leaves no room for a formula.
• LADWP territory: allocation is allowed only if it charges each unit for "the amount actually used" (Rule 18 D).
• San Diego: since August 17, 2025, San Diego Municipal Code §§98.1201–98.1207 limit City water, sewer, stormwater and trash charges to "no greater than the amount the landlord pays." It requires written notice, bills and calculations within 10 days of a request, and itemized third-party billing costs, and tenants can sue, including for punitive damages. Landlords submetering under SB 7 are exempt (§98.1203(b)), so the ordinance lands on RUBS.

On consumption, the best evidence is the 2004 National Multiple Family Submetering and Allocation Billing Program Study (Aquacraft, sponsored by the US EPA, NAA, NMHC and water utilities). Submetered properties used 15.3% less water, about 21.8 gallons per unit per day, than properties with water included in rent. The study found "no evidence that Ratio Utility Billing Systems (RUBS) reduced water use by a statistically significant amount." Our RUBS vs. Submetering in California guide covers the full comparison.

Building Layout: Where Meters Can Go

Whether a building submeters well comes down to plumbing. Three questions decide most projects.

Our Meter Retrofit Checklist covers the survey and installation sequence for an occupied building in more detail.

If You're in LADWP Territory

LADWP's Rule 18 covers water as well as electricity. It prohibits resale but lets units be submetered and billed at "no more than if the Department provided the water … directly," with "no additional costs, fees, service charges … of any nature," including meter-reading, account and equipment charges. Bills must be separate per unit and show the reads, and the rates must be posted.

That collides with SB 7's billing fee. SB 7 preserves local rules only if they were adopted before January 1, 2013, and LADWP's rules date from 1983 and 2008 with later amendments. Nobody has resolved which one wins. Until someone does, don't build an LA project on recovering the SB 7 fee, and plan on meeting both sets of rules.

Your Apartment Water Submetering Checklist

Frequently Asked Questions

Sources

Accessed September 2026.

• California Civil Code §1954.202, §1954.204, §1954.205, §1954.206, §1954.210, §1954.213 and §1954.216 (§§1954.201–1954.219, SB 7) — scope, disclosure, charges, bills, leaks, late fees
• California Water Code §537 and §537.1 (§§537–537.5), and §517 — new-construction measurement, exemptions and installers
• California Business and Professions Code §12500.5, §12500 and §12240 — type approval and device fees
• California Public Utilities Code §2705.5; Golden State Water Rule 19 — submetering on CPUC-regulated water
• California Code of Regulations, Title 4, §4070 and §4075, and NIST Handbook 44 §3.36, via the CDFA 2024 Field Reference Manual — tolerances, inspection intervals and fees
• LADWP Rules Governing Water and Electric Service, Rule 18 — resale and submetering
• San Diego Municipal Code §§98.1201–98.1207 — utility fee pass-through, effective August 17, 2025
• Mayer, Towler, DeOreo et al., National Multiple Family Submetering and Allocation Billing Program Study (Aquacraft and EBMUD, 2004)