diff --git a/api/src/com/cloud/api/commands/CreateTemplateCmd.java b/api/src/com/cloud/api/commands/CreateTemplateCmd.java
old mode 100644
new mode 100755
index 6e30653d24c..c1f60fb3ea0
--- a/api/src/com/cloud/api/commands/CreateTemplateCmd.java
+++ b/api/src/com/cloud/api/commands/CreateTemplateCmd.java
@@ -30,6 +30,9 @@ import com.cloud.api.response.StoragePoolResponse;
 import com.cloud.api.response.TemplateResponse;
 import com.cloud.async.AsyncJob;
 import com.cloud.event.EventTypes;
+import com.cloud.exception.InvalidParameterValueException;
+import com.cloud.exception.PermissionDeniedException;
+import com.cloud.exception.ResourceAllocationException;
 import com.cloud.storage.Snapshot;
 import com.cloud.storage.Volume;
 import com.cloud.template.VirtualMachineTemplate;
@@ -170,7 +173,13 @@ public class CreateTemplateCmd extends BaseAsyncCreateCmd {
 
     @Override
     public void create(){
-        VirtualMachineTemplate template = _userVmService.createPrivateTemplateRecord(this);
+        VirtualMachineTemplate template = null;
+		try {
+			template = _userVmService.createPrivateTemplateRecord(this);		
+		} catch (ResourceAllocationException ex) {
+            s_logger.warn("Exception: ", ex);
+            throw new ServerApiException(BaseCmd.RESOURCE_ALLOCATION_ERROR, ex.getMessage());
+		}
         if (template != null){
             this.setEntityId(template.getId());
         } else {
diff --git a/api/src/com/cloud/vm/UserVmService.java b/api/src/com/cloud/vm/UserVmService.java
index 28b5c436870..643d63761b9 100755
--- a/api/src/com/cloud/vm/UserVmService.java
+++ b/api/src/com/cloud/vm/UserVmService.java
@@ -99,9 +99,12 @@ public interface UserVmService {
      * @param cmd the command object that defines the name, display text, snapshot/volume, bits, public/private, etc.
      * for the private template
      * @return the vm template object if successful, null otherwise
-     * @throws InvalidParameterValueException, PermissionDeniedException
+     * @throws ResourceAllocationException 
+     * @throws PermissionDeniedException 
+     * @throws InvalidParameterValueException 
+     * @throws PermissionDeniedException
      */
-    VirtualMachineTemplate createPrivateTemplateRecord(CreateTemplateCmd cmd);
+    VirtualMachineTemplate createPrivateTemplateRecord(CreateTemplateCmd cmd) throws InvalidParameterValueException, PermissionDeniedException, ResourceAllocationException;
     
     /**
      * Creates a private template from a snapshot of a VM
diff --git a/server/src/com/cloud/vm/UserVmManagerImpl.java b/server/src/com/cloud/vm/UserVmManagerImpl.java
index b9cf3aa3e9e..7337a21d139 100755
--- a/server/src/com/cloud/vm/UserVmManagerImpl.java
+++ b/server/src/com/cloud/vm/UserVmManagerImpl.java
@@ -1172,7 +1172,7 @@ public class UserVmManagerImpl implements UserVmManager, UserVmService, Manager
 
 
     @Override
-    public VMTemplateVO createPrivateTemplateRecord(CreateTemplateCmd cmd) throws InvalidParameterValueException, PermissionDeniedException {
+    public VMTemplateVO createPrivateTemplateRecord(CreateTemplateCmd cmd) throws InvalidParameterValueException, PermissionDeniedException, ResourceAllocationException {
         Long userId = UserContext.current().getCallerUserId();
         if (userId == null) {
             userId = User.UID_SYSTEM;
@@ -1182,7 +1182,7 @@ public class UserVmManagerImpl implements UserVmManager, UserVmService, Manager
         boolean isAdmin = ((account == null) || isAdmin(account.getType()));
         
     	VMTemplateVO privateTemplate = null;
-
+    	
     	UserVO user = _userDao.findById(userId);
     	
     	if (user == null) {
@@ -1231,6 +1231,12 @@ public class UserVmManagerImpl implements UserVmManager, UserVmService, Manager
             throw new InvalidParameterValueException("Failed to create private template " + name + ", a template with that name already exists.");
         }
 
+        AccountVO ownerAccount = _accountDao.findById(volume.getAccountId());
+        if (_accountMgr.resourceLimitExceeded(ownerAccount, ResourceType.template)) {
+        	ResourceAllocationException rae = new ResourceAllocationException("Maximum number of templates and ISOs for account: " + account.getAccountName() + " has been exceeded.");
+        	rae.setResourceType("template");
+        	throw rae;
+        }
         // do some parameter defaulting
     	Integer bits = cmd.getBits();
     	Boolean requiresHvm = cmd.getRequiresHvm();