diff --git a/server/src/com/cloud/vm/UserVmManagerImpl.java b/server/src/com/cloud/vm/UserVmManagerImpl.java
index bc9c8ffe2a4..f9f65b96605 100755
--- a/server/src/com/cloud/vm/UserVmManagerImpl.java
+++ b/server/src/com/cloud/vm/UserVmManagerImpl.java
@@ -2141,6 +2141,8 @@ public class UserVmManagerImpl implements UserVmManager, UserVmService, Manager
             throw new CloudRuntimeException("Unable to assign Vm to the group " + group);
         }
         
+        _networkGroupMgr.addInstanceToGroups(vm.getId(), cmd.getSecurityGroupIdList());
+        
         return vm;
 	}
 	
@@ -2188,9 +2190,6 @@ public class UserVmManagerImpl implements UserVmManager, UserVmService, Manager
 			updateVmStateForFailedVmCreation(vm.getId());
 		}
 		
-		_networkGroupMgr.addInstanceToGroups(vm.getId(), cmd.getSecurityGroupIdList());
-		
-		
 		if (template.getEnablePassword()) {
 		    //this value is not being sent to the backend; need only for api dispaly purposes
 		    vm.setPassword(password);