Isn't the warranty still in effrect? If not, where is it leaking? Maybe around a fitting or is it in the tank itself?

If the body of the unit is leaking, you'll need to replace it. That'll save water and energy.
Have you verified that it's not just the pressure relief valve? That would be a simpler, cheaper fix. And is more probable after only 2-1/2 years.
If you do replace the unit yourself, be gentle with the new one. Don't scrape, scratch, and bang it around. And if it's in the crawl space don't place it on dirt - put some treated wood under it. And put an extension on the pressure relief valve so that any water coming out doesn't wet the outside of the unit or splash water and/or mud on it. All this is to prevent it from rusting and to keep the insulation dry on the inside.

CANT TELL WHERE IT IS LEAKING FROM SEEMS TO BE BY THE LEG, ITS HARD TO GET TO ITS BETWEEN MY FURNACE AND DRYER. THE WARRANTY IS 5 YEARS ON THE TANK, BUT THE PLACE WE PURCHASED IT FROM IS OUT OF BUSINESS...ANY SUGGESTIONS??

Dryers are usually not hard to move. If you can't get any closer, try looking with a flashlight and a hand mirror. Can you see the pressure relief valve? Is it on the side that's leaking? If so, try opening and closing the valve a couple of times. It will probably be a spring-loaded lever, near the top of the unit. Sometimes they leak a little bit when mineral deposits build up. You can often clear them out enough to stop the leak just by opening and closing a few times.
Good luck.

[This message has been edited by rpxlpx (edited June 22, 2001).]

Is this a gas hot water heater?, and if so, how much water are we talking about leaking out. Mine in a garage at times will have condensate leak out when the weather is humid. The clue here is the leak is only after lots of operation such as washing or showers or dishwasher operation.

As far as the seller being out of business, the manufacturer should still honor ther warranty.

OFIC, what sometimes happens after high hot-water usage is that the heater refills with cold water and then as the cold water heats up, the pressure increases and gets too high because of expansion. That's when the pressure relief valve lets a little out. It's a safety thing, and normal if it doesn't happen too much.

THE VALVE IS ON THE TOP, THE FAUCET IS ON THE BOTTOM, THE TANK ITSELF IS NOT WET. ITS UNDERNEATH THE UNIT. WHEN I FEEL UNDER IT IS WET, THE FLOOR IS WET NO PUDDLES, BUT WET I CANT TELL IF IT IS LEEKING IN THE MIDDLE AND RUNNING TOWARDS THE LEG OR IF IT IS LEEKING AT THE LEG.. ALSO IS THERE A WAY TO TELL BY THE NUMBERS ON IT HOW OLD IT IS FOR SURE??
(THANKS FOR ALL YOUR REPLIES SO FAR.. JK

If you can't tell any other way, you'll probbly just have to move the unit. Sometimes that's impossible without uninstalling it.
Since it's not leaking around the valve or faucet, it's likely the tank leaking. That means replacement.

THANK YOU EVERYONE FOR YOUR REPLIES, IT LOOKS LIKE I WILL BE GOING SHOPPING THIS WEEKEND.....THANKS AGAIN