diff --git a/compiler/frontend/src/org/jetbrains/jet/lang/resolve/DeclarationResolver.java b/compiler/frontend/src/org/jetbrains/jet/lang/resolve/DeclarationResolver.java
index a234f58bfee..15b5e2b4cc4 100644
--- a/compiler/frontend/src/org/jetbrains/jet/lang/resolve/DeclarationResolver.java
+++ b/compiler/frontend/src/org/jetbrains/jet/lang/resolve/DeclarationResolver.java
@@ -18,10 +18,8 @@ package org.jetbrains.jet.lang.resolve;
 
 import com.google.common.base.Function;
 import com.google.common.base.Predicate;
-import com.google.common.collect.Collections2;
-import com.google.common.collect.HashMultimap;
-import com.google.common.collect.Lists;
-import com.google.common.collect.Multimap;
+import com.google.common.collect.*;
+import com.intellij.openapi.util.Pair;
 import com.intellij.psi.PsiElement;
 import org.jetbrains.annotations.NotNull;
 import org.jetbrains.annotations.Nullable;
@@ -32,10 +30,7 @@ import org.jetbrains.jet.lang.resolve.scopes.JetScope;
 import org.jetbrains.jet.lang.resolve.scopes.WritableScope;
 
 import javax.inject.Inject;
-import java.util.Collection;
-import java.util.Collections;
-import java.util.List;
-import java.util.Map;
+import java.util.*;
 
 import static org.jetbrains.jet.lang.diagnostics.Errors.*;
 
@@ -315,19 +310,45 @@ public class DeclarationResolver {
 
             Multimap<Name, DeclarationDescriptor> descriptorMap = HashMultimap.create();
             for (DeclarationDescriptor desc : allDescriptors) {
-                if (desc instanceof ClassDescriptor) {
+                if (desc instanceof ClassDescriptor || desc instanceof PropertyDescriptor) {
                     descriptorMap.put(desc.getName(), desc);
                 }
             }
+            
+           reportRedeclarations(descriptorMap); 
+        }
+    }
 
-            for (Name name : descriptorMap.keySet()) {
-                Collection<DeclarationDescriptor> descriptors = descriptorMap.get(name);
-                if (descriptors.size() > 1) {
-                    for (DeclarationDescriptor descriptor : descriptors) {
-                        trace.report(REDECLARATION.on(BindingContextUtils.classDescriptorToDeclaration(trace.getBindingContext(), (ClassDescriptor)descriptor), descriptor.getName().getName()));
+    private void reportRedeclarations(@NotNull Multimap<Name, DeclarationDescriptor> descriptorMap) {
+        Set<Pair<PsiElement, Name>> redeclarations = Sets.newHashSet();
+        for (Name name : descriptorMap.keySet()) {
+            Collection<DeclarationDescriptor> descriptors = descriptorMap.get(name);
+            if (descriptors.size() > 1) {
+                // We mustn't compare PropertyDescriptor with PropertyDescriptor because we do this at OverloadResolver
+                for (DeclarationDescriptor descriptor : descriptors) {
+                    if (descriptor instanceof ClassDescriptor) {
+                        for (DeclarationDescriptor descriptor2 : descriptors) {
+                            if (descriptor == descriptor2) {
+                                continue;
+                            }
+
+                            redeclarations.add(Pair.create(
+                                    BindingContextUtils.classDescriptorToDeclaration(trace.getBindingContext(), (ClassDescriptor) descriptor),
+                                    descriptor.getName()));
+                            if (descriptor2 instanceof PropertyDescriptor) {
+                                redeclarations.add(Pair.create(
+                                        BindingContextUtils.descriptorToDeclaration(trace.getBindingContext(), descriptor2),
+                                        descriptor2.getName()));
+                            }
+                        }
                     }
                 }
             }
         }
+        for (Pair<PsiElement, Name> redeclaration : redeclarations) {
+            trace.report(REDECLARATION.on(redeclaration.getFirst(), redeclaration.getSecond().getName()));
+        }
     }
+
+    
 }
diff --git a/compiler/testData/diagnostics/tests/redeclarations/PropertyAndInnerClass.kt b/compiler/testData/diagnostics/tests/redeclarations/PropertyAndInnerClass.kt
new file mode 100644
index 00000000000..afa9b89aa2b
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/redeclarations/PropertyAndInnerClass.kt
@@ -0,0 +1,13 @@
+public class A() {
+    public val <!REDECLARATION!>FOO<!>: String = "test"
+
+    public class <!REDECLARATION!>FOO<!>() { }
+}
+
+public class B() {
+   class object {
+      public val <!REDECLARATION!>FOO<!>: String = "test"
+      
+      public class <!REDECLARATION!>FOO<!>() { }
+   }
+}
diff --git a/compiler/tests/org/jetbrains/jet/checkers/JetDiagnosticsTestGenerated.java b/compiler/tests/org/jetbrains/jet/checkers/JetDiagnosticsTestGenerated.java
index 27e92ab48e2..9dec273a6fd 100644
--- a/compiler/tests/org/jetbrains/jet/checkers/JetDiagnosticsTestGenerated.java
+++ b/compiler/tests/org/jetbrains/jet/checkers/JetDiagnosticsTestGenerated.java
@@ -2265,6 +2265,11 @@ public class JetDiagnosticsTestGenerated extends AbstractDiagnosticsTestWithEage
                 doTest("compiler/testData/diagnostics/tests/redeclarations/PropertyAndFunInClass.kt");
             }
             
+            @TestMetadata("PropertyAndInnerClass.kt")
+            public void testPropertyAndInnerClass() throws Exception {
+                doTest("compiler/testData/diagnostics/tests/redeclarations/PropertyAndInnerClass.kt");
+            }
+            
             @TestMetadata("Redeclarations.kt")
             public void testRedeclarations() throws Exception {
                 doTest("compiler/testData/diagnostics/tests/redeclarations/Redeclarations.kt");