Thanks Jerry and Tim,

Eric,
I appreciate your thoughts. The concern was about floor finishes and walls. If leakage where to occur the wall on the right is a insulated wall which water can get in and the left wall is adjacent to the wood floors. The entrance was to a room with carpet. If it leaked these materials may need replacing. If the TPR went off you talking major flood and replacement. Common sense would tell you to install in pan.

As far as the TPR dripping is concerned you can place a flood alarm in the pan or terminate the drain in a area that can't be missed. Just like secondary condensate drains above windows.

There are hundreds of homes here that are being built with the water heater in the attic. The TPR extension is at the pan and it drains to the exterior. I don't think I would want to find out about it by the ceiling fallen out. I rather see it outside.

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Mike Schulz License 393
Affordable Home Inspections
www.houseinspections.com