diff --git a/app/models/project.rb b/app/models/project.rb
index 6c4f3075e1c0cff2473feb852ee224c1316044e1..f4d915179e82705a4cbdefb630fb0b8fd2b4cfd9 100644
--- a/app/models/project.rb
+++ b/app/models/project.rb
@@ -83,6 +83,7 @@ class Project < ActiveRecord::Base
             :wiki_enabled, inclusion: { in: [true, false] }
   validates :issues_tracker_id, length: { within: 0..255 }
 
+  validates :namespace, presence: true
   validates_uniqueness_of :name, scope: :namespace_id
   validates_uniqueness_of :path, scope: :namespace_id
 
@@ -165,11 +166,7 @@ class Project < ActiveRecord::Base
   end
 
   def to_param
-    if namespace
-      namespace.path + "/" + path
-    else
-      path
-    end
+    namespace.path + "/" + path
   end
 
   def web_url
diff --git a/spec/contexts/issues/bulk_update_context_spec.rb b/spec/contexts/issues/bulk_update_context_spec.rb
index 0966ee35745fe7c754e3fa835889109ce02ced1f..058e43ba0905accdbdfc24b69cc6d200ff53a53a 100644
--- a/spec/contexts/issues/bulk_update_context_spec.rb
+++ b/spec/contexts/issues/bulk_update_context_spec.rb
@@ -1,6 +1,8 @@
 require 'spec_helper'
 
 describe Issues::BulkUpdateContext do
+  before(:each) { ActiveRecord::Base.observers.enable(:user_observer) }
+  after(:each) { ActiveRecord::Base.observers.disable(:user_observer) }
 
   let(:issue) {
     create(:issue, project: @project)
@@ -9,7 +11,8 @@ describe Issues::BulkUpdateContext do
   before do
     @user = create :user
     opts = {
-      name: "GitLab"
+      name: "GitLab",
+      namespace: @user.namespace
     }
     @project = Projects::CreateContext.new(@user, opts).execute
   end
diff --git a/spec/contexts/projects_create_context_spec.rb b/spec/contexts/projects_create_context_spec.rb
index be492585b27421c310c9a51380effcebdab5124b..7b5fa530a8a09825e30de4761abf3b4cb0711bd0 100644
--- a/spec/contexts/projects_create_context_spec.rb
+++ b/spec/contexts/projects_create_context_spec.rb
@@ -1,11 +1,15 @@
 require 'spec_helper'
 
 describe Projects::CreateContext do
+  before(:each) { ActiveRecord::Base.observers.enable(:user_observer) }
+  after(:each) { ActiveRecord::Base.observers.disable(:user_observer) }
+
   describe :create_by_user do
     before do
       @user = create :user
       @opts = {
-        name: "GitLab"
+        name: "GitLab",
+        namespace: @user.namespace
       }
     end
 
diff --git a/spec/models/project_spec.rb b/spec/models/project_spec.rb
index 3bac142f4e2e06a3e12b2e811d93362f42a37049..c3d2bf5d4a6683e88f788748e5e9bcbe20f5fafd 100644
--- a/spec/models/project_spec.rb
+++ b/spec/models/project_spec.rb
@@ -67,6 +67,7 @@ describe Project do
     it { should ensure_length_of(:description).is_within(0..2000) }
     it { should validate_presence_of(:creator) }
     it { should ensure_length_of(:issues_tracker_id).is_within(0..255) }
+    it { should validate_presence_of(:namespace) }
 
     it "should not allow new projects beyond user limits" do
       project2 = build(:project)
diff --git a/spec/requests/api/internal_spec.rb b/spec/requests/api/internal_spec.rb
index 028617aa08e64dadac589a577716bbbe7d67c74f..e8870f4d5d8c83401e78d224f67f2a2cd0a78cd9 100644
--- a/spec/requests/api/internal_spec.rb
+++ b/spec/requests/api/internal_spec.rb
@@ -2,6 +2,8 @@ require 'spec_helper'
 
 describe API::API do
   include ApiHelpers
+  before(:each) { ActiveRecord::Base.observers.enable(:user_observer) }
+  after(:each) { ActiveRecord::Base.observers.disable(:user_observer) }
 
   let(:user) { create(:user) }
   let(:key) { create(:key, user: user) }
diff --git a/spec/requests/api/issues_spec.rb b/spec/requests/api/issues_spec.rb
index d5f75367e4ad905967c780b8e4ae1b876033005d..a97d6a282a9bf55195ef6920146280b395f513a1 100644
--- a/spec/requests/api/issues_spec.rb
+++ b/spec/requests/api/issues_spec.rb
@@ -2,6 +2,8 @@ require 'spec_helper'
 
 describe API::API do
   include ApiHelpers
+  before(:each) { ActiveRecord::Base.observers.enable(:user_observer) }
+  after(:each) { ActiveRecord::Base.observers.disable(:user_observer) }
 
   let(:user) { create(:user) }
   let!(:project) { create(:project, namespace: user.namespace ) }
diff --git a/spec/requests/api/notes_spec.rb b/spec/requests/api/notes_spec.rb
index 48a2d111f8cab72ab0b3f88be3bdaea2f0cb6d01..ba18b123039c97912ef97eb2b3d8417bd4cab497 100644
--- a/spec/requests/api/notes_spec.rb
+++ b/spec/requests/api/notes_spec.rb
@@ -2,6 +2,8 @@ require 'spec_helper'
 
 describe API::API do
   include ApiHelpers
+  before(:each) { ActiveRecord::Base.observers.enable(:user_observer) }
+  after(:each) { ActiveRecord::Base.observers.disable(:user_observer) }
 
   let(:user) { create(:user) }
   let!(:project) { create(:project, namespace: user.namespace ) }
diff --git a/spec/services/project_transfer_service_spec.rb b/spec/services/project_transfer_service_spec.rb
index bc26403b7f4607c703baf6195138885c156007d4..109b429967eb612778e11cac6d576e4a55cf44b7 100644
--- a/spec/services/project_transfer_service_spec.rb
+++ b/spec/services/project_transfer_service_spec.rb
@@ -21,25 +21,7 @@ describe ProjectTransferService do
     let(:user) { create(:user) }
     let(:project) { create(:project, namespace: user.namespace) }
 
-    before do
-      @result = service.transfer(project, nil)
-    end
-
-
-    it { @result.should be_true }
-    it { project.namespace.should == nil }
-  end
-
-  context 'no namespace -> namespace' do
-    let(:project) { create(:project) }
-    let(:user) { create(:user) }
-
-    before do
-      @result = service.transfer(project, user.namespace)
-    end
-
-    it { @result.should be_true }
-    it { project.namespace.should == user.namespace }
+    it { lambda{service.transfer(project, nil)}.should raise_error(ActiveRecord::RecordInvalid) }
   end
 
   def service