Does anybody know why they would install a tankless water heater so high up and if it is even allowed?
Instant hot water to the bathroom. Allowed, not sure. Not in my neck of the woods due to weather.
I would imagine that the plumber called for some inevitable service will be pretty shocked when they have to get out an extension ladder to look at the damn thing.
Most like to shorten the run to the faucet so you wouldn’t have to wait for hot water.
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I was thinking up high like that access to the gas valve, TPR valve and general accessibility to equipment would be an issue.
Aesthetically pleasing as well
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That appears to be a Rinnai (unknown model) and is so unbelievably hilarious! But hey they do have a proper exterior electrical cut-off switch as required by Rinnai!
IMO absolutely no valid reason to mount it so high. However there is no prohibition to the height and even Rinnai has mounting procedures/requirements for multiple wall mounted units that stack above each other and can result in 12’+ heights.
It’s just plain ridiculous but here is where you have to use other possible requirements and reasons for not mounting it this high. These are some.
Rinnai claims units such as the RL75eN can withstand temps as low as 24 Degrees Fahrenheit without freezing. But that does not take into account wind chill factors. A unit with no protection, even as simple as an exterior mounting cabinet, is susceptible to freezing.
What is the R value of the pipe insulation an R3, R5?? Also the valves and other piping components, valves, etc. are not insulated. Bad enough they are subjected to extended freeze conditions but add in a wind chill and the chance of freeze damage increases.
I can’t tell if the line running up (right side) is water or other. If it is water it is most likely PEX and simple R3 insulation may not provide that manufacturer’s insulation requirements for that situation.
Then we have no apparent wiring for a remote temperature controller unless they hacked through the back of the unit to run it in. Add to it the very unsafe and unnecessary height and the homeowner has no “safe” access to the unit for temperature adjustments as needed, emergency access if needed (think of freeze conditions), and simple owner maintenance such as annual filter cleaning/change.
That is a hilarious picture and thanks for sharing!
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Plus they have to climb a ladder to turn the gas valve off. I would say most people don’t have extension ladders…
Also PEX piping is susceptible to sunlight damage.
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Are you sure, looks like an outdoor receptacle rather than a disconnect 
you know, in case they need to plug something in while servicing 
I’ve seen the same weather box with switches. My pool light even had one.
Ray, Even if this is allowed, and it appears it may be acceptable by the letter of the installation instructions etc… I think I’d still note in the report that its not a typical installation and that additional costs may be incurred if any service ever has to be performed. (I think I recall that Rinnai and Navien both recommend annual cleaning of these appliances). Not sure I’d elevate it to the level of some action required but at least educate the client. It is a RIDICULOUS installation.
Other considerations that could elevate it to some “action required” defect:
The PEX (condensate drain?) shouldn’t be used outdoors (As noted by someone else here)
I’d also make sure that the CSST gas line is properly sleeved where it passes through the foundation.
Where is the gas valve? Accessible? Within sight of the thing?
Is there a workspace requirement that you could call out?
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It could be, need to pop that cover open. Can a drone do that yet?
You could be right! I suppose you could use it to plug in an electric motor driven scissor lift to get up there for maintenance! 
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Thanks for your reply…yes I checked all that stuff…it’s ridiculous…I think that the level workspace requirement implies that you can stand in front of the equipment and service it. I’m surprised the city inspector didn’t say anything…I noted the house next door had the same setup…With all these great comments from you guys I’m thinking of posting more ridiculous stuff I see…
I recently had one installed inside a crawlspace of an old house. Rather than tell them it can’t or shouldn’t be there, I explained all the things that could go wrong, all the reasons why that access is not sufficient - let the buyer make up their own mind. Here in FL, freezing isn’t an issue, but the gas shutoff and maintenance are.