diff --git a/lib/ldp.js b/lib/ldp.js
index 448e3ac52..e6ed2de7c 100644
--- a/lib/ldp.js
+++ b/lib/ldp.js
@@ -243,7 +243,14 @@ class LDP {
         'PUT request requires a content-type via the Content-Type header')
     }
 
+    // reject resource with percent-encoded $ extension
+    const dollarExtensionRegex = /%(?:24)\.[^%(?:24)]*$/ // /\$\.[^$]*$/
+    if ((url.url || url).match(dollarExtensionRegex)) {
+      throw error(400, 'Resource with a $.ext is not allowed by the server')
+    }
+
     // check if a folder or file with same name exists
+    // const urlItem = url.url || url
     await this.checkItemName(url)
 
     // First check if we are above quota
@@ -350,17 +357,27 @@ class LDP {
 
   async checkItemName (url) {
     let testName
-    const itemUrl = (url.url || url)
+    const { hostname, pathname } = this.resourceMapper._parseUrl(url) // (url.url || url)
+    let itemUrl = this.resourceMapper.resolveUrl(hostname, pathname)
     const container = itemUrl.endsWith('/')
     try {
       const testUrl = container ? itemUrl.slice(0, -1) : itemUrl + '/'
       const { path: testPath } = await this.resourceMapper.mapUrlToFile({ url: testUrl })
-      // testName = fs.lstatSync(testPath).isDirectory()
       testName = container ? fs.lstatSync(testPath).isFile() : fs.lstatSync(testPath).isDirectory()
-    } catch (err) { testName = false }
-
+    } catch (err) {
+      testName = false
+
+      // item does not exist, check one level up the tree
+      if (itemUrl.endsWith('/')) itemUrl = itemUrl.substring(0, itemUrl.length - 1)
+      itemUrl = itemUrl.substring(0, itemUrl.lastIndexOf('/') + 1)
+      const { pathname } = this.resourceMapper._parseUrl(itemUrl) // (url.url || url)
+      // check not at root
+      if (pathname !== '/') {
+        await this.checkItemName(itemUrl)
+      }
+    }
     if (testName) {
-      throw error(200, 'Container and resource cannot have the same name in URI')
+      throw error(404, 'Container and resource cannot have the same name in URI')
     }
   }
 
diff --git a/test/integration/http-test.js b/test/integration/http-test.js
index a4d913af9..cbe7d5bc9 100644
--- a/test/integration/http-test.js
+++ b/test/integration/http-test.js
@@ -535,13 +535,29 @@ describe('HTTP APIs', function () {
         .expect(hasHeader('acl', 'baz.ttl' + suffixAcl))
         .expect(201, done)
     })
-    it('should not create new resource if folder with same name exists', function (done) {
-      server.put('/foo/bar')
+    it('should not create a resource with percent-encoded $.ext', function (done) {
+      server.put('/foo/bar/baz%24.ttl')
         .send(putRequestBody)
         .set('content-type', 'text/turtle')
-        .expect(hasHeader('describedBy', 'bar' + suffixMeta))
-        .expect(hasHeader('acl', 'bar' + suffixAcl))
-        .expect(200, done)
+        // .expect(hasHeader('describedBy', 'baz.ttl' + suffixMeta))
+        // .expect(hasHeader('acl', 'baz.ttl' + suffixAcl))
+        .expect(400, done) // 404
+    })
+    it('should create a resource without extension', function (done) {
+      server.put('/foo/bar/baz')
+        .send(putRequestBody)
+        .set('content-type', 'text/turtle')
+        .expect(hasHeader('describedBy', 'baz' + suffixMeta))
+        .expect(hasHeader('acl', 'baz' + suffixAcl))
+        .expect(201, done)
+    })
+    it('should not create new resource if a folder/resource with same name will exist in tree', function (done) {
+      server.put('/foo/bar/baz/test.ttl')
+        .send(putRequestBody)
+        .set('content-type', 'text/turtle')
+        .expect(hasHeader('describedBy', 'test.ttl' + suffixMeta))
+        .expect(hasHeader('acl', 'test.ttl' + suffixAcl))
+        .expect(404, done)
     })
     it('should return 201 when trying to put to a container without content-type',
       function (done) {
@@ -587,7 +603,7 @@ describe('HTTP APIs', function () {
       return Promise.all([
         rm('/false-file-48484848'),
         createTestResource('/.acl'),
-        createTestResource('/profile/card$.ttl'),
+        createTestResource('/profile/card'),
         createTestResource('/delete-test-empty-container/.meta.acl'),
         createTestResource('/put-resource-1.ttl'),
         createTestResource('/put-resource-with-acl.ttl'),
diff --git a/test/integration/ldp-test.js b/test/integration/ldp-test.js
index 0027cfcbc..cca0cc2fc 100644
--- a/test/integration/ldp-test.js
+++ b/test/integration/ldp-test.js
@@ -162,13 +162,13 @@ describe('LDP', function () {
 
     it.skip('with a larger file to exceed allowed quota', function () {
       const randstream = stringToStream(randomBytes(2100))
-      return ldp.put('localhost', '/resources/testQuota.txt', randstream).catch((err) => {
+      return ldp.put('/localhost', '/resources/testQuota.txt', randstream).catch((err) => {
         assert.notOk(err)
       })
     })
     it('should fail if a over quota', function () {
       const hellostream = stringToStream('hello world')
-      return ldp.put('localhost', '/resources/testOverQuota.txt', hellostream).catch((err) => {
+      return ldp.put('/localhost', '/resources/testOverQuota.txt', hellostream).catch((err) => {
         assert.equal(err.status, 413)
       })
     })