diff --git a/management/server/grpcserver.go b/management/server/grpcserver.go
index d35d0adb4c7..81d0e140375 100644
--- a/management/server/grpcserver.go
+++ b/management/server/grpcserver.go
@@ -203,8 +203,11 @@ func (s *Server) registerPeer(peerKey wgtypes.Key, req *proto.LoginRequest) (*Pe
 		},
 	})
 	if err != nil {
-		if s, ok := status.FromError(err); ok && s.Code() == codes.FailedPrecondition {
-			return nil, err
+		s, ok := status.FromError(err)
+		if ok {
+			if s.Code() == codes.FailedPrecondition || s.Code() == codes.OutOfRange {
+				return nil, err
+			}
 		}
 		return nil, status.Errorf(codes.NotFound, "provided setup key doesn't exists")
 	}
diff --git a/management/server/network.go b/management/server/network.go
index 8b9cd1d9b5f..c094c58aa0b 100644
--- a/management/server/network.go
+++ b/management/server/network.go
@@ -1,9 +1,10 @@
 package server
 
 import (
-	"fmt"
 	"github.com/c-robinson/iplib"
 	"github.com/rs/xid"
+	"google.golang.org/grpc/codes"
+	"google.golang.org/grpc/status"
 	"math/rand"
 	"net"
 	"sync"
@@ -77,13 +78,10 @@ func AllocatePeerIP(ipNet net.IPNet, takenIps []net.IP) (net.IP, error) {
 		takenIPMap[ip.String()] = struct{}{}
 	}
 
-	ips, _, err := generateIPs(&ipNet, takenIPMap)
-	if err != nil {
-		return nil, fmt.Errorf("failed allocating new IP for the ipNet %s and takenIps %s", ipNet.String(), takenIps)
-	}
+	ips, _ := generateIPs(&ipNet, takenIPMap)
 
 	if len(ips) == 0 {
-		return nil, fmt.Errorf("failed allocating new IP for the ipNet %s - network is out of IPs", ipNet.String())
+		return nil, status.Errorf(codes.OutOfRange, "failed allocating new IP for the ipNet %s - network is out of IPs", ipNet.String())
 	}
 
 	// pick a random IP
@@ -95,7 +93,7 @@ func AllocatePeerIP(ipNet net.IPNet, takenIps []net.IP) (net.IP, error) {
 }
 
 // generateIPs generates a list of all possible IPs of the given network excluding IPs specified in the exclusion list
-func generateIPs(ipNet *net.IPNet, exclusions map[string]struct{}) ([]net.IP, int, error) {
+func generateIPs(ipNet *net.IPNet, exclusions map[string]struct{}) ([]net.IP, int) {
 
 	var ips []net.IP
 	for ip := ipNet.IP.Mask(ipNet.Mask); ipNet.Contains(ip); incIP(ip) {
@@ -108,10 +106,10 @@ func generateIPs(ipNet *net.IPNet, exclusions map[string]struct{}) ([]net.IP, in
 	lenIPs := len(ips)
 	switch {
 	case lenIPs < 2:
-		return ips, lenIPs, nil
+		return ips, lenIPs
 
 	default:
-		return ips[1 : len(ips)-1], lenIPs - 2, nil
+		return ips[1 : len(ips)-1], lenIPs - 2
 	}
 }
 
diff --git a/management/server/peer.go b/management/server/peer.go
index c4c04bb9959..a9b33f33465 100644
--- a/management/server/peer.go
+++ b/management/server/peer.go
@@ -346,7 +346,10 @@ func (am *DefaultAccountManager) AddPeer(
 	}
 
 	network := account.Network
-	nextIp, _ := AllocatePeerIP(network.Net, takenIps)
+	nextIp, err := AllocatePeerIP(network.Net, takenIps)
+	if err != nil {
+		return nil, err
+	}
 
 	newPeer := &Peer{
 		Key:      peer.Key,