diff --git a/src/libexpr/flake/flakeref.cc b/src/libexpr/flake/flakeref.cc
index 86a0982f3..09b5cecbc 100644
--- a/src/libexpr/flake/flakeref.cc
+++ b/src/libexpr/flake/flakeref.cc
@@ -102,6 +102,9 @@ std::pair<FlakeRef, std::string> parsePathFlakeRefWithFragment(
 
         if (isFlake) {
 
+            if (!S_ISDIR(lstat(path).st_mode))
+                throw BadURL("path '%s' is not a flake (because it's not a directory)", path);
+
             if (!allowMissing && !pathExists(path + "/flake.nix")){
                 notice("path '%s' does not contain a 'flake.nix', searching up",path);
 
@@ -124,9 +127,6 @@ std::pair<FlakeRef, std::string> parsePathFlakeRefWithFragment(
                     throw BadURL("could not find a flake.nix file");
             }
 
-            if (!S_ISDIR(lstat(path).st_mode))
-                throw BadURL("path '%s' is not a flake (because it's not a directory)", path);
-
             if (!allowMissing && !pathExists(path + "/flake.nix"))
                 throw BadURL("path '%s' is not a flake (because it doesn't contain a 'flake.nix' file)", path);
 
diff --git a/tests/functional/flakes/search-root.sh b/tests/functional/flakes/search-root.sh
index d8586dc8a..6b137aa86 100644
--- a/tests/functional/flakes/search-root.sh
+++ b/tests/functional/flakes/search-root.sh
@@ -22,7 +22,7 @@ mkdir subdir
 pushd subdir
 
 success=("" . .# .#test ../subdir ../subdir#test "$PWD")
-failure=("path:$PWD")
+failure=("path:$PWD" "../simple.nix")
 
 for i in "${success[@]}"; do
     nix build $i || fail "flake should be found by searching up directories"