diff --git a/app/contexts/projects/create_context.rb b/app/contexts/projects/create_context.rb
index 5329443c..e644d89a 100644
--- a/app/contexts/projects/create_context.rb
+++ b/app/contexts/projects/create_context.rb
@@ -1,10 +1,14 @@
 module Projects
   class CreateContext < BaseContext
+    def initialize(user, params)
+      @current_user, @params = user, params.dup
+    end
+
     def execute
       # get namespace id
-      namespace_id = params[:project].delete(:namespace_id)
+      namespace_id = params.delete(:namespace_id)
 
-      @project = Project.new(params[:project])
+      @project = Project.new(params)
 
       # Parametrize path for project
       #
@@ -25,7 +29,7 @@ module Projects
         end
       else
         # Set current user namespace if namespace_id is nil
-        @project.namespace_id = current_user.id
+        @project.namespace_id = current_user.namespace_id
       end
 
       Project.transaction do
diff --git a/app/controllers/projects_controller.rb b/app/controllers/projects_controller.rb
index 46096f28..6a7d7f8f 100644
--- a/app/controllers/projects_controller.rb
+++ b/app/controllers/projects_controller.rb
@@ -19,7 +19,7 @@ class ProjectsController < ProjectResourceController
   end
 
   def create
-    @project = Projects::CreateContext.new(nil, current_user, params).execute
+    @project = Projects::CreateContext.new(current_user, params).execute
 
     respond_to do |format|
       flash[:notice] = 'Project was successfully created.' if @project.saved?
diff --git a/lib/api/projects.rb b/lib/api/projects.rb
index c4717d11..cbef1ed3 100644
--- a/lib/api/projects.rb
+++ b/lib/api/projects.rb
@@ -43,7 +43,7 @@ module Gitlab
                                     :wall_enabled,
                                     :merge_requests_enabled,
                                     :wiki_enabled]
-        @project = Projects::CreateContext.new(nil, attrs, current_user).execute
+        @project = ::Projects::CreateContext.new(current_user, attrs).execute
         if @project.saved?
           present @project, with: Entities::Project
         else
diff --git a/spec/contexts/projects_create_context_spec.rb b/spec/contexts/projects_create_context_spec.rb
new file mode 100644
index 00000000..dd10dd3e
--- /dev/null
+++ b/spec/contexts/projects_create_context_spec.rb
@@ -0,0 +1,38 @@
+require 'spec_helper'
+
+describe Projects::CreateContext do
+  describe :create_by_user do
+    before do
+      @user = create :user
+      @opts = {
+        name: "GitLab"
+      }
+    end
+
+    context 'user namespace' do
+      before do
+        @project = create_project(@user, @opts)
+      end
+
+      it { @project.should be_valid }
+      it { @project.owner.should == @user }
+      it { @project.namespace.should == @user.namespace }
+    end
+
+    context 'group namespace' do
+      before do
+        @group = create :group, owner: @user
+        @opts.merge!(namespace_id: @group.id)
+        @project = create_project(@user, @opts)
+      end
+
+      it { @project.should be_valid }
+      it { @project.owner.should == @user }
+      it { @project.namespace.should == @group }
+    end
+  end
+
+  def create_project(user, opts)
+    Projects::CreateContext.new(user, opts).execute
+  end
+end
diff --git a/spec/models/project_spec.rb b/spec/models/project_spec.rb
index 223b9d48..17bc988b 100644
--- a/spec/models/project_spec.rb
+++ b/spec/models/project_spec.rb
@@ -153,36 +153,6 @@ describe Project do
     end
   end
 
-  describe :create_by_user do
-    before do
-      @user = create :user
-      @opts = {
-        name: "GitLab"
-      }
-    end
-
-    context 'user namespace' do
-      before do
-        @project = Project.create_by_user(@opts, @user)
-      end
-
-      it { @project.should be_valid }
-      it { @project.owner.should == @user }
-      it { @project.namespace.should == @user.namespace }
-    end
-
-    context 'user namespace' do
-      before do
-        @group = create :group, owner: @user
-        @opts.merge!(namespace_id: @group.id)
-        @project = Project.create_by_user(@opts, @user)
-      end
-
-      it { @project.should be_valid }
-      it { @project.owner.should == @user }
-      it { @project.namespace.should == @group }
-    end
-  end
 
   describe :find_with_namespace do
     context 'with namespace' do