Homeowners should install a drain pan at the bottom of the heater. The pan contains a pipe that prevents water from falling onto the floor. In this way, the water is safely drained. The position of the drain pan can be determined by the location where it is installed.
If your heater is installed in a basement, a drain pan is required under the heater. If the heater is installed in the garage, a drain pan is not required under the heater. It was common to see no pipe for years and years at all.
Now plumbers use a pipe to drain which is a great idea. In some locations, if the appliance is located in the home, a pipe must be plumbed to the outside of a home or a floor drain.
But the locations where appliances are located outside of the home, do not need the same requirement. Follow local building codes for the water that drains out of the tank.
Quoted from Various Sources
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