Unless it is in the plumbing code, there is no reason to keep the water heater 5 feet away. The working space is 30" wide (or width of equipment if wider) & 36" deep measured from the cover. The space does not have to be centered on the equipment.
Moving it over one stud space is probably the solution.
Working clearance at the panel is definitely part of the inspection & I personally enforce this one with no exceptions. We've all had to work on equipment that didn't have adequate space & I am not going to contribute to this particular problem When I get my current roll of film developed, I'll be submitting some working clearance violation pictures.
As for the GFI's, they are not a part of the inspection procedure unless the person hiring the inspector is paying for a whole house inspection. If they are missing, this is probably a "grandfather" issue. I always recommend installation of GFI's because they are relatively cheap for the amount of protection.
When I became an inspector, I promised myself I would not have any of the bad traits of inspectors I've dealt with. You'll never hear me say "the way I want this done" or "the way I do it", you get the drift. I'm sure I have my faults, but this isn't one of them.
Also, if I can't find it in the code book, it's not a violation. I will cite article numbers to electricians, I try to give a plain English explanation to homeowner's.
The flip side of what I say & don't say is that I hate to hear an electrician say "when did they change that?" Sometimes, it was never changed, it was wrong to begin with.
Finally, if it is a small violation, not enough straps on the cable, etc, I'll ask that it be fixed & will pass the intallation with the expectation that it will be taken care of. If I have to turn down an installation, for a major violation, I will write up everything that is not in compliance, including all those little nit-picking details & it all must be fixed before I will pass the job.
Well, thats enough of this screed. Good luck if you decide to take the test. I recommend you get ahold of the study guides.
Tom
