diff --git a/src/cpp/ripple/OfferCreateTransactor.cpp b/src/cpp/ripple/OfferCreateTransactor.cpp
index afff90699..686b21e83 100644
--- a/src/cpp/ripple/OfferCreateTransactor.cpp
+++ b/src/cpp/ripple/OfferCreateTransactor.cpp
@@ -426,6 +426,17 @@ TER OfferCreateTransactor::doApply()
 
 			terResult	= terNO_ACCOUNT;
 		}
+		else if (isSetBit(sleTakerPays->getFieldU32(sfFlags), lsfRequireAuth)) {
+			SLE::pointer	sleRippleState	= mEngine->entryCache(ltRIPPLE_STATE, Ledger::getRippleStateIndex(mTxnAccountID, uPaysIssuerID, uPaysCurrency));
+			bool			bHigh			= mTxnAccountID > uPaysIssuerID;
+
+			if (!sleRippleState
+				|| !isSetBit(sleRippleState->getFieldU32(sfFlags), (bHigh ? lsfHighAuth : lsfLowAuth))) {
+				cLog(lsWARNING) << "OfferCreate: delay: can't receive IOUs from issuer without auth.";
+
+				terResult	= terNO_AUTH;
+			}
+		}
 	}
 
 	STAmount		saPaid;
diff --git a/src/cpp/ripple/RippleCalc.cpp b/src/cpp/ripple/RippleCalc.cpp
index 213923acf..b8a0b0f0e 100644
--- a/src/cpp/ripple/RippleCalc.cpp
+++ b/src/cpp/ripple/RippleCalc.cpp
@@ -114,7 +114,7 @@ TER PathState::pushImply(
 
 // Append a node and insert before it any implied nodes.
 // Offers may go back to back.
-// <-- terResult: tesSUCCESS, temBAD_PATH, terNO_LINE, tecPATH_DRY
+// <-- terResult: tesSUCCESS, temBAD_PATH, terNO_ACCOUNT, terNO_AUTH, terNO_LINE, tecPATH_DRY
 TER PathState::pushNode(
 	const int iType,
 	const uint160& uAccountID,
@@ -231,11 +231,30 @@ TER PathState::pushNode(
 						<< STAmount::createHumanCurrency(pnCur.uCurrencyID)
 						<< "." ;
 
-					STAmount	saOwed	= lesEntries.rippleOwed(pnCur.uAccountID, pnBck.uAccountID, pnCur.uCurrencyID);
+					SLE::pointer		sleBck	= lesEntries.entryCache(ltACCOUNT_ROOT, Ledger::getAccountRootIndex(pnBck.uAccountID));
+					bool				bHigh	= pnBck.uAccountID > pnCur.uAccountID;
 
-					if (!saOwed.isPositive() && -saOwed >= lesEntries.rippleLimit(pnCur.uAccountID, pnBck.uAccountID, pnCur.uCurrencyID))
+					if (!sleBck)
 					{
-						terResult	= tecPATH_DRY;
+						cLog(lsWARNING) << "pushNode: delay: can't receive IOUs from non-existent issuer: " << RippleAddress::createHumanAccountID(pnBck.uAccountID);
+
+						terResult	= terNO_ACCOUNT;
+					}
+					else if (isSetBit(sleBck->getFieldU32(sfFlags), lsfRequireAuth)
+						&& !isSetBit(sleRippleState->getFieldU32(sfFlags), (bHigh ? lsfHighAuth : lsfLowAuth))) {
+						cLog(lsWARNING) << "pushNode: delay: can't receive IOUs from issuer without auth.";
+
+						terResult	= terNO_AUTH;
+					}
+
+					if (tesSUCCESS == terResult)
+					{
+						STAmount	saOwed	= lesEntries.rippleOwed(pnCur.uAccountID, pnBck.uAccountID, pnCur.uCurrencyID);
+
+						if (!saOwed.isPositive() && -saOwed >= lesEntries.rippleLimit(pnCur.uAccountID, pnBck.uAccountID, pnCur.uCurrencyID))
+						{
+							terResult	= tecPATH_DRY;
+						}
 					}
 				}
 			}
@@ -287,7 +306,7 @@ TER PathState::pushNode(
 
 // Set to an expanded path.
 //
-// terStatus = tesSUCCESS, temBAD_PATH, terNO_LINE, or temBAD_PATH_LOOP
+// terStatus = tesSUCCESS, temBAD_PATH, terNO_LINE, terNO_ACCOUNT, terNO_AUTH, or temBAD_PATH_LOOP
 void PathState::setExpanded(
 	const LedgerEntrySet&	lesSource,
 	const STPath&			spSourcePath,
diff --git a/src/cpp/ripple/TransactionErr.cpp b/src/cpp/ripple/TransactionErr.cpp
index a605a2f49..160064ffe 100644
--- a/src/cpp/ripple/TransactionErr.cpp
+++ b/src/cpp/ripple/TransactionErr.cpp
@@ -82,6 +82,7 @@ bool transResultInfo(TER terCode, std::string& strToken, std::string& strHuman)
 		{	terFUNDS_SPENT,			"terFUNDS_SPENT",			"Can't set password, password set funds already spent."	},
 		{	terINSUF_FEE_B,			"terINSUF_FEE_B",			"Account balance can't pay fee."						},
 		{	terNO_ACCOUNT,			"terNO_ACCOUNT",			"The source account does not exist."					},
+		{	terNO_AUTH,				"terNO_AUTH",				"Not authorized to hold IOUs."							},
 		{	terNO_LINE,				"terNO_LINE",				"No such line."											},
 		{	terPRE_SEQ,				"terPRE_SEQ",				"Missing/inapplicable prior transaction."				},
 		{	terOWNERS,				"terOWNERS",				"Non-zero owner count."									},
diff --git a/src/cpp/ripple/TransactionErr.h b/src/cpp/ripple/TransactionErr.h
index a1d9fb690..fe54d9f4b 100644
--- a/src/cpp/ripple/TransactionErr.h
+++ b/src/cpp/ripple/TransactionErr.h
@@ -95,6 +95,7 @@ enum TER	// aka TransactionEngineResult
 	terFUNDS_SPENT,			// This is a free transaction, therefore don't burden network.
 	terINSUF_FEE_B,			// Can't pay fee, therefore don't burden network.
 	terNO_ACCOUNT,			// Can't pay fee, therefore don't burden network.
+	terNO_AUTH,				// Not authorized to hold IOUs.
 	terNO_LINE,				// Internal flag.
 	terOWNERS,				// Can't succeed with non-zero owner count.
 	terPRE_SEQ,				// Can't pay fee, no point in forwarding, therefore don't burden network.
diff --git a/test/path-test.js b/test/path-test.js
index 59ffd8cc0..ee75afbd6 100644
--- a/test/path-test.js
+++ b/test/path-test.js
@@ -1189,8 +1189,8 @@ buster.testCase("Indirect paths", {
 });
 
 buster.testCase("Quality paths", {
-  // 'setUp' : testutils.build_setup(),
-  'setUp' : testutils.build_setup({ verbose: true }),
+  'setUp' : testutils.build_setup(),
+  // 'setUp' : testutils.build_setup({ verbose: true }),
   // 'setUp' : testutils.build_setup({ verbose: true, no_server: true }),
   'tearDown' : testutils.build_teardown(),