Water, permits, and local rules that surprise buyers in Monterey County

Last checked: September 2026. Some of this is changing right now, especially the water rules and the county's short-term rental rules. Always confirm with the agency before you rely on it.

Most of buying a home here works like anywhere else in California. This chapter covers the part that doesn't. Water is limited on the Peninsula, older homes come with extra rules, several cities want their own report before a sale closes, and short-term rentals are tightly controlled almost everywhere.

None of this is a reason not to buy here. Most of it only matters if it touches what you plan to do with the house.

Why water is a big deal on the Peninsula

The Peninsula's main water utility, California American Water (Cal Am), has pulled much of its water from the Carmel River for decades. In 1995, the State Water Resources Control Board found that Cal Am was taking more than it had rights to. In 2009, the state issued a cease and desist order.

That order does more than limit pumping. It blocks new water connections, and it blocks increased water use at existing addresses when it comes from a change in zoning or use. That's what people here mean when they talk about "the moratorium."

Where things stand in September 2026: In October 2025, the Monterey Peninsula Water Management District (MPWMD) asked the state to lift the moratorium, with a way to bring the limits back if water use goes over certain triggers. In August 2026, Cal Am told the state it supports a temporary suspension. The state is running a formal process on it, with a public comment session set for November 5, 2026.

Relief looks closer than it has in years, but as of today the rules haven't changed. Be careful with any property where your plans depend on water that isn't there yet. A vacant lot without a water meter is the classic example. Under the current rules, getting a new connection for it may not be possible.

Who this applies to

MPWMD covers Carmel-by-the-Sea, Del Rey Oaks, Monterey, Pacific Grove, Sand City, and Seaside, plus unincorporated areas including Pebble Beach, Carmel Highlands, and Carmel Valley.

Not every home in that area gets water from Cal Am, and not all of Monterey County is in the district. Marina and Salinas, for example, are outside MPWMD and have different water providers.

Adding a bathroom or an ADU

MPWMD tracks water use through fixture units, and adding water use usually takes a water permit. Each city also has its own share of water to hand out, which is why you'll hear people talk about "water credits."

There's one well-known exception. Under MPWMD's second bathroom protocol, a home built before May 2001 with fewer than two bathrooms can add a second bathroom, or turn a half bath into a full bath, without using water from the city's allocation. It's limited to one toilet, one tub or shower, and one or two sinks, and it has to be inside the existing house.

The catch is that a bathroom added this way doesn't really count as water you "have." It can't be used to create an ADU, and removing those fixtures later doesn't earn a water credit. MPWMD has also required deed restrictions with these permits. So if you add a second bathroom now and want an ADU later, you may need more water for that project than you'd expect.

How the numbers work for a specific property depends on the city, the house, and the rules at the time. It's worth asking MPWMD and the city directly, and getting the answer in writing if you can. People hear different versions of these rules, and they do change.

The water rule at every sale

This one surprises almost everyone from out of the area. Every change of ownership inside MPWMD triggers water efficiency requirements. The property has to have:

• High efficiency or ultra high efficiency toilets
• Showerheads at 2.0 gallons per minute or less
• Bathroom faucets at 1.2 gallons per minute or less
• Kitchen, utility, and bar sink faucets at 1.8 gallons per minute or less
• A rain sensor on any automatic irrigation system (unless it's weather-based)

The owner is responsible, so normally the seller handles it. The buyer and seller can agree that the buyer will do it instead. According to MPWMD, buyers get six months to do the work, and once title transfers it's the buyer's responsibility. If you're planning to remodel and want to pick your own fixtures, that option can make sense.

The inspection isn't only about toilets. MPWMD may need to see every water fixture in the home, and its records show what's been permitted over the years. If there's a bathroom or fixture that was never permitted, this is often where it comes up. MPWMD says unpermitted fixtures have to be permitted with the city's approval or removed completely. If a past problem was never fixed, MPWMD may also have recorded a notice on the property's title.

You don't need to research this for every house. But if you're planning to add fixtures, or something about the house doesn't seem to match its records, you can contact MPWMD's conservation office and ask what's on file for the property. It's a phone call or an email, and it's better to know before you're in contract.

City reports before closing

Some cities want their own look at a property before it changes hands. These are separate from your home inspection, and the seller usually orders them.

Monterey. The city requires a Residential Property Inspection report before close of escrow on single-family homes and apartment buildings. Condos are exempt. It's an exterior inspection plus a records review, and the city can look inside if it has reason to believe there's unpermitted work. The buyer signs a receipt for the report. Monterey also requires a sewer lateral inspection before a sale, and the buyer and seller can agree to shift that to the buyer.

Seaside. The city requires a Real Property Disclosure Report before a sale. It includes an exterior inspection and a records review. Seaside's code also requires the property to meet the city's water conservation rules before close of escrow.

Pacific Grove. The city's code requires a residential building record report before a sale closes. It reviews city records and includes an exterior inspection.

Marina. The city requires a residential property inspection report before closing, and it's delivered to the buyer.

Carmel area. The Carmel Area Wastewater District requires a video inspection of the sewer lateral when a property sells, or with a remodel over $50,000. It can be waived if the whole lateral was replaced in the last 10 years. If the line fails, it has to be repaired or replaced.

A sewer lateral is the pipe that runs from the house to the public sewer. In older neighborhoods with big trees, roots in those pipes are common, and replacing one isn't cheap. If a report turns up a problem, it may be something to work out with the seller. How much room there is depends on the market and your offer, and in a multiple-offer situation there may not be much.

Unpermitted work

Older homes often have additions, garage conversions, or bathrooms done without permits. Sometimes it was decades ago, and the current owner may not know.

Sellers in California have to disclose what they know about work done without permits, but only what they know. If it matters to you, you can look up the permit history:

• Inside a city: Contact that city's building department.
• Unincorporated county (Carmel Valley, Pebble Beach, Prunedale, and similar areas): The county has an online permit portal called Accela Citizen Access, and you can request a Residential Escrow Report from the county's records team.

This matters most if you plan to remodel. In unincorporated Monterey County, the county says it won't issue new permits on a property until open code cases or expired permits are cleared up. If you buy a house with an expired permit, that becomes yours to deal with before your own project can start.

If the house is near the coast

Much of the Monterey County coastline is in the California Coastal Zone, and all of Carmel-by-the-Sea is inside it. In the coastal zone, some projects need a coastal development permit on top of a regular building permit. That usually means more review and more time.

One trigger that surprises people is archaeology. The Ohlone and Esselen peoples lived along this coast for thousands of years, and village sites are still in the ground, including shell middens, which are layers of shells and other remains left from daily life. Carmel Point is one of the best-known examples. The Coastal Commission has described it as an area of high archaeological sensitivity, and in 2019 and 2020 it stepped in on permits for three new homes there because of their basements and excavation.

In the county's Carmel area, it's common to see coastal permits required just for building within 750 feet of a known archaeological site, even for a garage or a small addition. If you're planning work on a coastal property, ask the planning department early what approvals your project would need.

Historic homes

Carmel-by-the-Sea keeps a Historic Resources Inventory. For homes on it, changes go through the city's Historic Resources Board, which reviews them against federal preservation standards. For older homes that aren't listed, the city can make a determination about whether the property is historic. According to city records, a determination that a property is not historic stays valid for five years.

Pacific Grove has its own Historic Resources Inventory. Changes to listed homes can need a Historic Preservation Permit along with architectural review. There can be an upside. Pacific Grove has granted historic homes relief from rules like setbacks and parking requirements.

Monterey uses historic zoning. H-1 zoning covers the city's most important historic properties, like Colton Hall and the Custom House, and can be applied without the owner's consent. H-2 zoning covers properties with local historic importance, and generally needs the owner's consent. The city offers incentives for both, and it's been surveying neighborhoods for buildings that might qualify. Most homes in Monterey aren't historic-zoned, but it's worth checking the zoning if you're buying an older one and planning changes.

Trees

The Monterey pines and oaks are part of why people love it here. They're also protected.

Carmel-by-the-Sea requires a permit to remove many trees. When construction is involved, even cutting roots over two inches or live limbs over four inches can need a permit. The city can also require replacement trees.

Pacific Grove reviews tree removal and major pruning as part of development projects, and can require replacement trees or a fee instead.

Unincorporated Monterey County protects native oaks in most areas. In the Del Monte Forest (Pebble Beach), tree removal applications also need a letter from the Pebble Beach Company.

If your plans depend on taking out a tree, like a new garage or an addition, find out whether it's protected before you buy.

Short-term rentals

A lot of buyers come here planning to rent the house on Airbnb or VRBO part of the time. In most of Monterey County, that's either not allowed or very hard to get approved. Short-term generally means stays under 30 days.

Monterey. Rentals under 30 days are prohibited, and the city actively enforces its ordinance against advertising them.

Carmel-by-the-Sea. Short-term rentals are prohibited in the single-family zone, which covers most of the city's homes. The few that exist are in commercial and multi-family zones, and are either older grandfathered permits or tied to creating new housing.

Pacific Grove. Whole-home short-term rental licenses are capped at 250 citywide, limited to certain zones, and can't be within 55 feet of another licensed rental. Availability changes, so ask the city where things stand before you count on one. The city also has a separate home sharing license for owners who live in the house while renting part of it.

Seaside. Non-hosted licenses, where you rent the whole house, are capped at 90. The cap has been reached, and the city is taking waitlist requests. Hosted rentals, where the owner lives there and is present during the stay, aren't capped.

Salinas. When I called the city, I was told there's no application process for short-term rentals, and there isn't much published about it online. The zoning code also doesn't list them as an allowed use in residential zones. You'll still see listings in Salinas, but that doesn't mean they're permitted. If you're considering it, confirm with the city's planning department yourself.

Unincorporated county (Carmel Valley, Cachagua, Pebble Beach, Prunedale, and similar areas). The county adopted vacation rental rules in 2024 with three types: homestays, where the owner is present; limited vacation rentals, allowed up to three times a year; and commercial vacation rentals. Commercial rentals are capped at 4% of homes in each planning area, aren't allowed in Carmel Valley's residential zones, and need a discretionary permit that can cost thousands of dollars and may or may not be approved. In coastal areas, the county puts that permit at about $12,000. These rules are still changing. A court struck parts of them in 2026, and the county has discussed tightening them further.

A few things apply almost everywhere:

• A permit isn't guaranteed, even where they're allowed. Where there's a cap, timing matters. Deals here have fallen apart because a permit the buyer was counting on went to someone else first. Get the answer from the city, not just from the seller or the listing.
• Permits don't always come with the house. Some transfer to a new owner and some don't, depending on the city. Don't assume a seller's permit is yours.
• Rental income from a listing isn't a promise. If the seller's numbers came from renting short-term, find out whether that was allowed and whether you could do the same.
• Rentals of 30 days or more generally fall outside these rules, which is why some owners here rent furnished month to month instead.

If short-term renting is a big part of why you're buying, talk to the city or county about that specific property before you write an offer.

Renting it out long-term

If you're buying to rent to a long-term tenant, there are rules for that too, and they can vary by city.

State rules. California's Tenant Protection Act caps yearly rent increases on covered rentals at 5% plus local inflation, or 10%, whichever is lower. After a tenant has been there 12 months, the landlord generally needs a legal reason to end the tenancy. Newer buildings are exempt, and so are some single-family homes and condos owned by individuals, but only if the landlord gives the tenant a specific written notice. Whether a property is covered depends on its details, so it's worth checking with a landlord-tenant attorney or an experienced property manager.

Salinas. Salinas has its own, stricter rules right now: rent stabilization, a rental registry, just cause eviction protections, and anti-harassment protections. The rent stabilization ordinance limits increases on covered units to once a year, at 2.75% or 75% of inflation, whichever is lower. The city council voted to repeal those ordinances, but a referendum petition put the question to voters as Measure H on the November 3, 2026 ballot. Until the vote, the rules stay in effect. A "yes" vote repeals them, and a "no" vote keeps them.

Other cities. Local rules can change quickly, and some cities have their own registration or notice requirements. If you're buying a rental anywhere in the county, ask the city what applies before you run your numbers.

Where to focus your own research

Doing your own homework is a good thing. You just don't need to do all of it for every house. Most of this chapter only matters if it touches your plans, so here's a quick way to sort it:

• Planning to live in the house as it is? Most of what's here gets handled during escrow. The seller orders the city reports and water certification, and your agent and escrow officer keep track of it.
• Planning to add a bathroom, an ADU, or an addition? Talk to the city and MPWMD about your project before you commit.
• Planning to rent it out? Check the short-term or long-term rental rules above, then confirm with the city or county.
• Buying an older home and planning changes? Ask whether it's historic, near the coast, or has protected trees.

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This is general information, not legal advice. Rules change, and some of these are changing right now. Always confirm current requirements with the city, the county, or MPWMD, and talk to a real estate attorney or contractor about your specific property. I'm a real estate agent, not a lawyer.