diff --git a/lightningd/peer_control.c b/lightningd/peer_control.c
index 1da45f501..2b7875981 100644
--- a/lightningd/peer_control.c
+++ b/lightningd/peer_control.c
@@ -216,7 +216,12 @@ void peer_fail_transient(struct peer *peer, const char *fmt, ...)
 /* When daemon reports a STATUS_FAIL_PEER_BAD, it goes here. */
 static void bad_peer(struct subd *subd, const char *msg)
 {
-	peer_fail_permanent_str(subd->peer, msg);
+	struct peer *peer = subd->peer;
+
+	/* Don't close peer->owner, subd will clean that up. */
+	peer->owner = NULL;
+	subd->peer = NULL;
+	peer_fail_permanent_str(peer, msg);
 }
 
 void peer_set_condition(struct peer *peer, enum peer_state old_state,
@@ -684,8 +689,8 @@ struct peer *peer_by_id(struct lightningd *ld, const struct pubkey *id)
 /* When a per-peer subdaemon exits, see if we need to do anything. */
 static void peer_owner_finished(struct subd *subd, int status)
 {
-	/* If peer has moved on, do nothing. */
-	if (subd->peer->owner != subd) {
+	/* If peer has moved on, do nothing (can be NULL if it errored out) */
+	if (!subd->peer || subd->peer->owner != subd) {
 		log_debug(subd->ld->log, "Subdaemon %s died (%i), peer moved",
 			  subd->name, status);
 		return;
diff --git a/tests/test_lightningd.py b/tests/test_lightningd.py
index 0a1818d18..cc3e5e30f 100644
--- a/tests/test_lightningd.py
+++ b/tests/test_lightningd.py
@@ -87,7 +87,7 @@ class NodeFactory(object):
         self.nodes = []
         self.executor = executor
 
-    def get_node(self, disconnect=None):
+    def get_node(self, disconnect=None, options=None):
         node_id = self.next_id
         self.next_id += 1
 
@@ -103,6 +103,8 @@ class NodeFactory(object):
                 f.write("\n".join(disconnect))
             daemon.cmd_line.append("--dev-disconnect=dev_disconnect")
         daemon.cmd_line.append("--dev-fail-on-subdaemon-fail")
+        if options:
+            daemon.cmd_line.append(options)
         rpc = LightningRpc(socket_path, self.executor)
 
         node = utils.LightningNode(daemon, rpc, bitcoind, self.executor)
@@ -382,6 +384,26 @@ class LightningDTests(BaseLightningDTests):
         # But this should work.
         self.pay(l2, l1, available - reserve*2)
 
+    def test_bad_opening(self):
+        # l1 asks for a too-long locktime
+        l1 = self.node_factory.get_node(options='--locktime-blocks=100')
+        l2 = self.node_factory.get_node(options='--max-locktime-blocks=99')
+        ret = l1.rpc.connect('localhost', l2.info['port'], l2.info['id'])
+
+        assert ret['id'] == l2.info['id']
+
+        l1.daemon.wait_for_log('WIRE_GOSSIPCTL_NEW_PEER')
+        l2.daemon.wait_for_log('WIRE_GOSSIPCTL_NEW_PEER')
+
+        addr = l1.rpc.newaddr()['address']
+        txid = l1.bitcoin.rpc.sendtoaddress(addr, 10**6 / 10**8 + 0.01)
+        tx = l1.bitcoin.rpc.getrawtransaction(txid)
+
+        l1.rpc.addfunds(tx)
+        self.assertRaises(ValueError, l1.rpc.fundchannel, l2.info['id'], 10**6)
+
+        l2.daemon.wait_for_log('to_self_delay 100 larger than 99')
+
     def test_closing(self):
         l1,l2 = self.connect()