Morgan Hill Requires an Inspection California Law Doesn't. Here's What Sellers Need to Know.

When you list a home in California, you expect the disclosure paperwork to follow a familiar script: the Transfer Disclosure Statement, the Natural Hazard Disclosure, maybe a lead-paint addendum if the house predates 1978. Sellers get comfortable with that checklist because it's the same checklist statewide.

Morgan Hill added something to that script that most of the state doesn't have. It isn't a disclosure form you fill out from memory. It's a pass-or-fail inspection, performed by a licensed contractor, filed directly with the city, that has to clear before a sale can close. And the rule for who owes it doesn't sit still. It moves every January 1st, which means a house that was exempt a few years ago can find itself back inside the requirement without anyone touching the pipe.

What the ordinance actually asks of a seller

The City of Morgan Hill's Private Sewer Lateral Ordinance took effect June 1, 2022, alongside a companion Plumbing Fixture Ordinance. Together they require two things before a residential sale closes: a camera inspection of the sewer line running from the house to the city's main, and, for older homes, a check of water fixtures like toilets and showerheads.

The sewer piece works like this. A contractor who is NASSCO-certified, carries a California contractor's license, and holds a Morgan Hill business license runs a closed-circuit TV camera through the private sewer lateral, typically starting at the cleanout closest to the building and working out to the connection at the street. That contractor files the results with the city. A passing inspection produces a Certificate of Compliance within five business days, and that certificate is good for ten years, which matters more than it sounds like it should.

The Plumbing Fixture Ordinance runs on a separate, fixed rule: any home built on or before January 1, 1994 needs its toilets, showerheads, and urinals checked by a licensed plumber. Unlike the sewer rule, this cutoff date doesn't move.

The line that moves every January

Here's the part that trips people up. The Private Sewer Lateral Ordinance was written to apply to any property more than 15 years old, but instead of picking a fixed year, the city recalculates the cutoff annually. When the ordinance took effect in 2022, it covered homes built in 2006 or earlier. By the city's own schedule, that threshold has crept forward every year since:

Take a house built in 2009. When the ordinance took effect in 2022, that house was already exempt, since anything built 2007 or later cleared the bar that year. By 2026, the exempt line has moved to homes built 2011 or later, and 2009 no longer clears it. The same house, same pipe, same owner in some cases, has gone from exempt to required without anyone touching the plumbing. The requirement isn't really about how old the pipe is. It's about which side of a calendar line your build year happens to land on the year you list.

What happens when the camera finds a problem

If the inspection fails, the ordinance gives a seller two paths. The straightforward one is repair and reinspect: a licensed plumbing contractor with a Morgan Hill business license fixes whatever the camera flagged, and the same NASSCO-certified inspector runs a second pass to confirm it holds up.

The other path is a notarized Transfer of Responsibility Form, which shifts the repair obligation to the buyer. If both sides agree to it, the buyer gets 180 days after water service starts to complete the work. Buyers who don't finish in that window can face penalties, including having water service terminated, so this option moves the deadline rather than removing it.

Either way, the paperwork isn't optional at closing. The city's Utility Billing Division requires a Certificate of Compliance, an approved Exemption Form, or an approved Transfer of Responsibility Form before it will even open new water service for the buyer. A failed sewer scope two weeks before closing isn't a footnote. It can hold up the point where the new owner can turn the taps on.

If you bought your Morgan Hill home from a seller who already passed this inspection, check your closing file before calling a contractor. A Certificate of Compliance is good for ten years, and plenty of sellers pay for an inspection they didn't actually need.

What this costs, and who's supposed to pay it

A standard sewer camera inspection nationally runs somewhere between $125 and $500 for a straightforward residential line as of 2026, according to home-services pricing data, with costs climbing toward the higher end for homes without an easy cleanout or with longer, more complicated runs. That's the inspection itself. Repairs, if the camera finds root intrusion, cracked clay pipe, or a displaced joint, are a separate line item and depend entirely on what's actually wrong.

The ordinance places the cost on the seller by default, since it's the seller's responsibility to arrange the initial inspection. That's worth factoring into your listing math well before an offer comes in, particularly if your home was built right around 2010 or 2011 and you weren't expecting to be on the hook this year. The city also runs a financial assistance program for lateral repairs, which is worth a look before assuming a failed inspection means an expensive scramble.

Building this into your Morgan Hill listing timeline

The mistake to avoid is treating this like a standard disclosure you can handle during a short contingency period. A failed inspection needs time for repairs and a second inspection, and none of that fits neatly into a typical escrow window if you're starting from scratch after you already have a signed purchase agreement.

The better sequence is to file the city's Kickoff Form and line up a Qualified Contractor before you list, not after you're under contract. If your certificate is still within its ten-year window from a prior sale, you may not need to do this at all. If it isn't, you want to know whether your pipe passes weeks before a buyer's inspection period starts the clock on everyone's patience.

A few questions Morgan Hill sellers ask

Does this apply if my house is just outside city limits, in unincorporated San Martin? No. This is a City of Morgan Hill municipal ordinance tied to properties connected to the city's sewer main. Homes on septic systems or outside the city's sewer service area, including much of unincorporated San Martin just south of town, fall under different county rules entirely, not this ordinance.

What if I own a condo or townhome? Depending on how your building connects to the city main, you may fall under the Private Sanitary Sewer Collection System rules instead of the standard PSL process, which run on their own inspection cycle, every two years for systems serving ten or more units, every five years for smaller ones, with the same 2011 exemption cutoff for 2026.

Does Gilroy or Hollister have the same requirement? Not based on anything in Morgan Hill's own ordinance language, which is specific to this city. Don't assume a checklist that applies to a Morgan Hill address carries over to a listing in a different city, even one close by.

If you're weighing a sale in Morgan Hill and want to know exactly where your home falls on that rolling calendar before you list, that's precisely the kind of local detail worth sorting out early rather than discovering it in escrow. Kimberly Macias tracks these city-specific requirements as part of getting a listing ready, and a good next step is to get your free home valuation so we can talk through your specific address, build year, and timeline together.