diff --git a/src/config/api-server/tests/test_crud_basic.py b/src/config/api-server/tests/test_crud_basic.py
index 62700ae4b4c..c476f3e0d8d 100644
--- a/src/config/api-server/tests/test_crud_basic.py
+++ b/src/config/api-server/tests/test_crud_basic.py
@@ -31,6 +31,7 @@
 from vnc_api.common import exceptions as vnc_exceptions
 import vnc_api.gen.vnc_api_test_gen
 from vnc_api.gen.resource_test import *
+import cfgm_common
 
 sys.path.append('../common/tests')
 from test_utils import *
diff --git a/src/config/api-server/vnc_cfg_types.py b/src/config/api-server/vnc_cfg_types.py
index 54502cb39f6..48dd9b53ef8 100644
--- a/src/config/api-server/vnc_cfg_types.py
+++ b/src/config/api-server/vnc_cfg_types.py
@@ -168,6 +168,17 @@ def _get_subnet_name(cls, vn_dict, subnet_uuid):
                                   subnet_dict['ip_prefix_len'])
                     return subnet_name
 
+    @classmethod
+    def _is_gateway_ip(cls, vn_dict, ip_addr):
+        ipam_refs = vn_dict.get('network_ipam_refs', [])
+        for ipam in ipam_refs:
+            ipam_subnets = ipam['attr'].get('ipam_subnets', [])
+            for subnet in ipam_subnets:
+                if subnet['default_gateway'] == ip_addr:
+                    return True
+
+        return False
+
     @classmethod
     def http_post_collection(cls, tenant_name, obj_dict, db_conn):
         vn_fq_name = obj_dict['virtual_network_refs'][0]['to']
@@ -187,6 +198,15 @@ def http_post_collection(cls, tenant_name, obj_dict, db_conn):
         sub = cls._get_subnet_name(vn_dict, subnet_uuid) if subnet_uuid else None
         if subnet_uuid and not sub:
             return (False, (404, "Subnet id " + subnet_uuid + " not found"))
+
+        # If its an external network, check whether floating IP equivalent to
+        # requested fixed-IP is already reserved.
+        router_external = vn_dict.get('router_external', None)
+        if req_ip and router_external and \
+           not cls._is_gateway_ip(vn_dict, req_ip) and \
+           cls.addr_mgmt.is_ip_allocated(req_ip, vn_fq_name):
+            return (False, (403, 'Ip address already in use'))
+
         try:
             ip_addr = cls.addr_mgmt.ip_alloc_req(
                 vn_fq_name, sub=sub, asked_ip_addr=req_ip)
diff --git a/src/config/common/tests/test_utils.py b/src/config/common/tests/test_utils.py
index 0dc5608e7d4..2622c502e5a 100644
--- a/src/config/common/tests/test_utils.py
+++ b/src/config/common/tests/test_utils.py
@@ -781,6 +781,10 @@ def create(self, path, value='', *args, **kwargs):
         self._values[path] = value
     # end create
 
+    def get(self, path):
+        return self._values[path]
+    # end get
+
     def delete(self, path, recursive=False):
         if not recursive:
             try: