diff --git a/rhodecode/controllers/admin/repos_groups.py b/rhodecode/controllers/admin/repos_groups.py
--- a/rhodecode/controllers/admin/repos_groups.py
+++ b/rhodecode/controllers/admin/repos_groups.py
@@ -45,6 +45,7 @@ from rhodecode.model.forms import ReposG
 from rhodecode.model.meta import Session
 from rhodecode.model.repo import RepoModel
 from webob.exc import HTTPInternalServerError, HTTPNotFound
+from rhodecode.lib.utils2 import str2bool
 
 log = logging.getLogger(__name__)
 
@@ -162,7 +163,7 @@ class ReposGroupsController(BaseControll
             Session().commit()
             h.flash(_('updated repos group %s') \
                     % form_result['group_name'], category='success')
-            #TODO: in futureaction_logger(, '', '', '', self.sa)
+            #TODO: in future action_logger(, '', '', '', self.sa)
         except formencode.Invalid, errors:
 
             return htmlfill.render(
@@ -227,10 +228,11 @@ class ReposGroupsController(BaseControll
 
         :param group_name:
         """
-
         try:
-            ReposGroupModel().revoke_user_permission(
-                repos_group=group_name, user=request.POST['user_id']
+            recursive = str2bool(request.POST.get('recursive', False))
+            ReposGroupModel().delete_permission(
+                repos_group=group_name, obj=request.POST['user_id'],
+                obj_type='user', recursive=recursive
             )
             Session().commit()
         except Exception:
@@ -248,9 +250,10 @@ class ReposGroupsController(BaseControll
         """
 
         try:
-            ReposGroupModel().revoke_users_group_permission(
-                repos_group=group_name,
-                group_name=request.POST['users_group_id']
+            recursive = str2bool(request.POST.get('recursive', False))
+            ReposGroupModel().delete_permission(
+                repos_group=group_name, obj=request.POST['users_group_id'],
+                obj_type='users_group', recursive=recursive
             )
             Session().commit()
         except Exception:
diff --git a/rhodecode/model/forms.py b/rhodecode/model/forms.py
--- a/rhodecode/model/forms.py
+++ b/rhodecode/model/forms.py
@@ -128,6 +128,7 @@ def ReposGroupForm(edit=False, old_data=
                                         testValueList=True,
                                         if_missing=None, not_empty=False)
         enable_locking = v.StringBoolean(if_missing=False)
+        recursive = v.StringBoolean(if_missing=False)
         chained_validators = [v.ValidReposGroup(edit, old_data),
                               v.ValidPerms('group')]
 
diff --git a/rhodecode/model/repo.py b/rhodecode/model/repo.py
--- a/rhodecode/model/repo.py
+++ b/rhodecode/model/repo.py
@@ -368,6 +368,7 @@ class RepoModel(BaseModel):
         obj.user = user
         obj.permission = permission
         self.sa.add(obj)
+        log.debug('Granted perm %s to %s on %s' % (perm, user, repo))
 
     def revoke_user_permission(self, repo, user):
         """
@@ -383,8 +384,10 @@ class RepoModel(BaseModel):
         obj = self.sa.query(UserRepoToPerm)\
             .filter(UserRepoToPerm.repository == repo)\
             .filter(UserRepoToPerm.user == user)\
-            .one()
-        self.sa.delete(obj)
+            .scalar()
+        if obj:
+            self.sa.delete(obj)
+            log.debug('Revoked perm on %s on %s' % (repo, user))
 
     def grant_users_group_permission(self, repo, group_name, perm):
         """
@@ -414,6 +417,7 @@ class RepoModel(BaseModel):
         obj.users_group = group_name
         obj.permission = permission
         self.sa.add(obj)
+        log.debug('Granted perm %s to %s on %s' % (perm, group_name, repo))
 
     def revoke_users_group_permission(self, repo, group_name):
         """
@@ -429,8 +433,10 @@ class RepoModel(BaseModel):
         obj = self.sa.query(UsersGroupRepoToPerm)\
             .filter(UsersGroupRepoToPerm.repository == repo)\
             .filter(UsersGroupRepoToPerm.users_group == group_name)\
-            .one()
-        self.sa.delete(obj)
+            .scalar()
+        if obj:
+            self.sa.delete(obj)
+            log.debug('Revoked perm to %s on %s' % (repo, group_name))
 
     def delete_stats(self, repo_name):
         """
diff --git a/rhodecode/model/repos_group.py b/rhodecode/model/repos_group.py
--- a/rhodecode/model/repos_group.py
+++ b/rhodecode/model/repos_group.py
@@ -32,7 +32,7 @@ from rhodecode.lib.utils2 import LazyPro
 
 from rhodecode.model import BaseModel
 from rhodecode.model.db import RepoGroup, RhodeCodeUi, UserRepoGroupToPerm, \
-    User, Permission, UsersGroupRepoGroupToPerm, UsersGroup
+    User, Permission, UsersGroupRepoGroupToPerm, UsersGroup, Repository
 
 log = logging.getLogger(__name__)
 
@@ -115,11 +115,12 @@ class ReposGroupModel(BaseModel):
                             'existing dir %s' % new_path)
         shutil.move(old_path, new_path)
 
-    def __delete_group(self, group):
+    def __delete_group(self, group, force_delete=False):
         """
         Deletes a group from a filesystem
 
         :param group: instance of group from database
+        :param force_delete: use shutil rmtree to remove all objects
         """
         paths = group.full_path.split(RepoGroup.url_sep())
         paths = os.sep.join(paths)
@@ -127,7 +128,10 @@ class ReposGroupModel(BaseModel):
         rm_path = os.path.join(self.repos_path, paths)
         if os.path.isdir(rm_path):
             # delete only if that path really exists
-            os.rmdir(rm_path)
+            if force_delete:
+                shutil.rmtree(rm_path)
+            else:
+                os.rmdir(rm_path)  # this raises an exception when there are still objects inside
 
     def create(self, group_name, group_description, parent=None, just_db=False):
         try:
@@ -150,32 +154,79 @@ class ReposGroupModel(BaseModel):
             log.error(traceback.format_exc())
             raise
 
+    def _update_permissions(self, repos_group, perms_new=None,
+                            perms_updates=None, recursive=False):
+        from rhodecode.model.repo import RepoModel
+        if not perms_new:
+            perms_new = []
+        if not perms_updates:
+            perms_updates = []
+
+        def _set_perm_user(obj, user, perm):
+            if isinstance(obj, RepoGroup):
+                ReposGroupModel().grant_user_permission(
+                    repos_group=obj, user=user, perm=perm
+                )
+            elif isinstance(obj, Repository):
+                # we set group permission but we have to switch to repo
+                # permission
+                perm = perm.replace('group.', 'repository.')
+                RepoModel().grant_user_permission(
+                    repo=obj, user=user, perm=perm
+                )
+
+        def _set_perm_group(obj, users_group, perm):
+            if isinstance(obj, RepoGroup):
+                ReposGroupModel().grant_users_group_permission(
+                    repos_group=obj, group_name=users_group, perm=perm
+                )
+            elif isinstance(obj, Repository):
+                # we set group permission but we have to switch to repo
+                # permission
+                perm = perm.replace('group.', 'repository.')
+                RepoModel().grant_users_group_permission(
+                    repo=obj, group_name=users_group, perm=perm
+                )
+        updates = []
+        log.debug('Now updating permissions for %s in recursive mode:%s'
+                  % (repos_group, recursive))
+
+        for obj in repos_group.recursive_groups_and_repos():
+            if not recursive:
+                obj = repos_group
+
+            # update permissions
+            for member, perm, member_type in perms_updates:
+                ## set for user
+                if member_type == 'user':
+                    # this updates also current one if found
+                    _set_perm_user(obj, user=member, perm=perm)
+                ## set for users group
+                else:
+                    _set_perm_group(obj, users_group=member, perm=perm)
+            # set new permissions
+            for member, perm, member_type in perms_new:
+                if member_type == 'user':
+                    _set_perm_user(obj, user=member, perm=perm)
+                else:
+                    _set_perm_group(obj, users_group=member, perm=perm)
+            updates.append(obj)
+            #if it's not recursive call
+            # break the loop and don't proceed with other changes
+            if not recursive:
+                break
+        return updates
+
     def update(self, repos_group_id, form_data):
 
         try:
             repos_group = RepoGroup.get(repos_group_id)
-
-            # update permissions
-            for member, perm, member_type in form_data['perms_updates']:
-                if member_type == 'user':
-                    # this updates also current one if found
-                    ReposGroupModel().grant_user_permission(
-                        repos_group=repos_group, user=member, perm=perm
-                    )
-                else:
-                    ReposGroupModel().grant_users_group_permission(
-                        repos_group=repos_group, group_name=member, perm=perm
-                    )
-            # set new permissions
-            for member, perm, member_type in form_data['perms_new']:
-                if member_type == 'user':
-                    ReposGroupModel().grant_user_permission(
-                        repos_group=repos_group, user=member, perm=perm
-                    )
-                else:
-                    ReposGroupModel().grant_users_group_permission(
-                        repos_group=repos_group, group_name=member, perm=perm
-                    )
+            recursive = form_data['recursive']
+            # iterate over all members(if in recursive mode) of this groups and
+            # set the permissions !
+            # this can be potentially heavy operation
+            self._update_permissions(repos_group, form_data['perms_new'],
+                                     form_data['perms_updates'], recursive)
 
             old_path = repos_group.full_path
 
@@ -191,7 +242,6 @@ class ReposGroupModel(BaseModel):
 
             # iterate over all members of this groups and set the locking !
             # this can be potentially heavy operation
-
             for obj in repos_group.recursive_groups_and_repos():
                 #set the value from it's parent
                 obj.enable_locking = repos_group.enable_locking
@@ -210,15 +260,54 @@ class ReposGroupModel(BaseModel):
             log.error(traceback.format_exc())
             raise
 
-    def delete(self, repos_group):
+    def delete(self, repos_group, force_delete=False):
         repos_group = self._get_repos_group(repos_group)
         try:
             self.sa.delete(repos_group)
-            self.__delete_group(repos_group)
+            self.__delete_group(repos_group, force_delete)
         except:
             log.exception('Error removing repos_group %s' % repos_group)
             raise
 
+    def delete_permission(self, repos_group, obj, obj_type, recursive):
+        """
+        Revokes permission for repos_group for given obj(user or users_group),
+        obj_type can be user or users group
+
+        :param repos_group:
+        :param obj: user or users group id
+        :param obj_type: user or users group type
+        :param recursive: recurse to all children of group
+        """
+        from rhodecode.model.repo import RepoModel
+        repos_group = self._get_repos_group(repos_group)
+
+        for el in repos_group.recursive_groups_and_repos():
+            if not recursive:
+                # if we don't recurse set the permission on only the top level
+                # object
+                el = repos_group
+
+            if isinstance(el, RepoGroup):
+                if obj_type == 'user':
+                    ReposGroupModel().revoke_user_permission(el, user=obj)
+                elif obj_type == 'users_group':
+                    ReposGroupModel().revoke_users_group_permission(el, group_name=obj)
+                else:
+                    raise Exception('undefined object type %s' % obj_type)
+            elif isinstance(el, Repository):
+                if obj_type == 'user':
+                    RepoModel().revoke_user_permission(el, user=obj)
+                elif obj_type == 'users_group':
+                    RepoModel().revoke_users_group_permission(el, group_name=obj)
+                else:
+                    raise Exception('undefined object type %s' % obj_type)
+
+            #if it's not recursive call
+            # break the loop and don't proceed with other changes
+            if not recursive:
+                break
+
     def grant_user_permission(self, repos_group, user, perm):
         """
         Grant permission for user on given repositories group, or update
@@ -246,6 +335,7 @@ class ReposGroupModel(BaseModel):
         obj.user = user
         obj.permission = permission
         self.sa.add(obj)
+        log.debug('Granted perm %s to %s on %s' % (perm, user, repos_group))
 
     def revoke_user_permission(self, repos_group, user):
         """
@@ -262,8 +352,10 @@ class ReposGroupModel(BaseModel):
         obj = self.sa.query(UserRepoGroupToPerm)\
             .filter(UserRepoGroupToPerm.user == user)\
             .filter(UserRepoGroupToPerm.group == repos_group)\
-            .one()
-        self.sa.delete(obj)
+            .scalar()
+        if obj:
+            self.sa.delete(obj)
+            log.debug('Revoked perm on %s on %s' % (repos_group, user))
 
     def grant_users_group_permission(self, repos_group, group_name, perm):
         """
@@ -294,6 +386,7 @@ class ReposGroupModel(BaseModel):
         obj.users_group = group_name
         obj.permission = permission
         self.sa.add(obj)
+        log.debug('Granted perm %s to %s on %s' % (perm, group_name, repos_group))
 
     def revoke_users_group_permission(self, repos_group, group_name):
         """
@@ -310,5 +403,7 @@ class ReposGroupModel(BaseModel):
         obj = self.sa.query(UsersGroupRepoGroupToPerm)\
             .filter(UsersGroupRepoGroupToPerm.group == repos_group)\
             .filter(UsersGroupRepoGroupToPerm.users_group == group_name)\
-            .one()
-        self.sa.delete(obj)
+            .scalar()
+        if obj:
+            self.sa.delete(obj)
+            log.debug('Revoked perm to %s on %s' % (repos_group, group_name))
diff --git a/rhodecode/model/user.py b/rhodecode/model/user.py
--- a/rhodecode/model/user.py
+++ b/rhodecode/model/user.py
@@ -564,7 +564,7 @@ class UserModel(BaseModel):
             rg_k = perm.UserRepoGroupToPerm.group.group_name
             p = perm.Permission.permission_name
             cur_perm = user.permissions[GK][rg_k]
-            if PERM_WEIGHTS[p] > PERM_WEIGHTS[cur_perm]:
+            if PERM_WEIGHTS[p] > PERM_WEIGHTS[cur_perm] or 1:  # disable check
                 user.permissions[GK][rg_k] = p
 
         # REPO GROUP + USER GROUP
@@ -588,7 +588,7 @@ class UserModel(BaseModel):
             cur_perm = user.permissions[GK][g_k]
             # overwrite permission only if it's greater than permission
             # given from other sources
-            if PERM_WEIGHTS[p] > PERM_WEIGHTS[cur_perm]:
+            if PERM_WEIGHTS[p] > PERM_WEIGHTS[cur_perm] or 1:  # disable check
                 user.permissions[GK][g_k] = p
 
         return user
diff --git a/rhodecode/model/validators.py b/rhodecode/model/validators.py
--- a/rhodecode/model/validators.py
+++ b/rhodecode/model/validators.py
@@ -499,9 +499,9 @@ def ValidPerms(type_='repo'):
             # fill new permissions in order of how they were added
             for k in sorted(map(int, new_perms_group.keys())):
                 perm_dict = new_perms_group[str(k)]
-                new_member = perm_dict['name']
-                new_perm = perm_dict['perm']
-                new_type = perm_dict['type']
+                new_member = perm_dict.get('name')
+                new_perm = perm_dict.get('perm')
+                new_type = perm_dict.get('type')
                 if new_member and new_perm and new_type:
                     perms_new.add((new_member, new_perm, new_type))
 
diff --git a/rhodecode/templates/admin/repos_groups/repos_group_edit_perms.html b/rhodecode/templates/admin/repos_groups/repos_group_edit_perms.html
--- a/rhodecode/templates/admin/repos_groups/repos_group_edit_perms.html
+++ b/rhodecode/templates/admin/repos_groups/repos_group_edit_perms.html
@@ -68,6 +68,12 @@
             </span>
         </td>
     </tr>
+    <tr>
+        <td colspan="6">
+           ${h.checkbox('recursive',value="True", label=_('apply to parents'))}
+           <span class="help-block">${_('Set or revoke permission to all children of that group, including repositories and other groups')}</span>
+        </td>
+    </tr>
 </table>
 <script type="text/javascript">
 function ajaxActionUser(user_id, field_id) {
@@ -81,7 +87,8 @@ function ajaxActionUser(user_id, field_i
             alert("${_('Failed to remove user')}");
         },
     };
-    var postData = '_method=delete&user_id=' + user_id;
+    var recursive = YUD.get('recursive').checked;
+    var postData = '_method=delete&recursive={0}&user_id={1}'.format(recursive,user_id);
     var request = YAHOO.util.Connect.asyncRequest('POST', sUrl, callback, postData);
 };
 
@@ -96,7 +103,8 @@ function ajaxActionUsersGroup(users_grou
             alert("${_('Failed to remove users group')}");
         },
     };
-    var postData = '_method=delete&users_group_id='+users_group_id;
+    var recursive = YUD.get('recursive').checked;
+    var postData = '_method=delete&recursive={0}&users_group_id={1}'.format(recursive,users_group_id);
     var request = YAHOO.util.Connect.asyncRequest('POST', sUrl, callback, postData);
 };
 
diff --git a/rhodecode/tests/functional/test_compare.py b/rhodecode/tests/functional/test_compare.py
--- a/rhodecode/tests/functional/test_compare.py
+++ b/rhodecode/tests/functional/test_compare.py
@@ -291,4 +291,3 @@ class TestCompareController(TestControll
         finally:
             RepoModel().delete(r2_id)
             RepoModel().delete(r1_id)
-
diff --git a/rhodecode/tests/models/common.py b/rhodecode/tests/models/common.py
new file mode 100644
--- /dev/null
+++ b/rhodecode/tests/models/common.py
@@ -0,0 +1,116 @@
+import os
+import unittest
+import functools
+from rhodecode.tests import *
+
+
+from rhodecode.model.repos_group import ReposGroupModel
+from rhodecode.model.repo import RepoModel
+from rhodecode.model.db import RepoGroup, Repository, User
+from rhodecode.model.user import UserModel
+
+from rhodecode.lib.auth import AuthUser
+from rhodecode.model.meta import Session
+
+
+def _make_group(path, desc='desc', parent_id=None,
+                 skip_if_exists=False):
+
+    gr = RepoGroup.get_by_group_name(path)
+    if gr and skip_if_exists:
+        return gr
+    if isinstance(parent_id, RepoGroup):
+        parent_id = parent_id.group_id
+    gr = ReposGroupModel().create(path, desc, parent_id)
+    return gr
+
+
+def _make_repo(name, repos_group=None, repo_type='hg'):
+    return RepoModel().create_repo(name, repo_type, 'desc',
+                                   TEST_USER_ADMIN_LOGIN,
+                                   repos_group=repos_group)
+
+
+def _destroy_project_tree(test_u1_id):
+    Session.remove()
+    repos_group = RepoGroup.get_by_group_name(group_name='g0')
+    for el in reversed(repos_group.recursive_groups_and_repos()):
+        if isinstance(el, Repository):
+            RepoModel().delete(el)
+        elif isinstance(el, RepoGroup):
+            ReposGroupModel().delete(el, force_delete=True)
+
+    u = User.get(test_u1_id)
+    Session().delete(u)
+    Session().commit()
+
+
+def _create_project_tree():
+    """
+    Creates a tree of groups and repositories to test permissions
+
+    structure
+     [g0] - group `g0` with 3 subgroups
+     |
+     |__[g0_1] group g0_1 with 2 groups 0 repos
+     |  |
+     |  |__[g0_1_1] group g0_1_1 with 1 group 2 repos
+     |  |   |__<g0/g0_1/g0_1_1/g0_1_1_r1>
+     |  |   |__<g0/g0_1/g0_1_1/g0_1_1_r2>
+     |  |__<g0/g0_1/g0_1_r1>
+     |
+     |__[g0_2] 2 repos
+     |  |
+     |  |__<g0/g0_2/g0_2_r1>
+     |  |__<g0/g0_2/g0_2_r2>
+     |
+     |__[g0_3] 1 repo
+        |
+        |_<g0/g0_3/g0_3_r1>
+
+    """
+    test_u1 = UserModel().create_or_update(
+        username=u'test_u1', password=u'qweqwe',
+        email=u'test_u1@rhodecode.org', firstname=u'test_u1', lastname=u'test_u1'
+    )
+    g0 = _make_group('g0')
+    g0_1 = _make_group('g0_1', parent_id=g0)
+    g0_1_1 = _make_group('g0_1_1', parent_id=g0_1)
+    g0_1_1_r1 = _make_repo('g0/g0_1/g0_1_1/g0_1_1_r1', repos_group=g0_1_1)
+    g0_1_1_r2 = _make_repo('g0/g0_1/g0_1_1/g0_1_1_r2', repos_group=g0_1_1)
+    g0_1_r1 = _make_repo('g0/g0_1/g0_1_r1', repos_group=g0_1)
+    g0_2 = _make_group('g0_2', parent_id=g0)
+    g0_2_r1 = _make_repo('g0/g0_2/g0_2_r1', repos_group=g0_2)
+    g0_2_r2 = _make_repo('g0/g0_2/g0_2_r2', repos_group=g0_2)
+    g0_3 = _make_group('g0_3', parent_id=g0)
+    g0_3_r1 = _make_repo('g0/g0_3/g0_3_r1', repos_group=g0_3)
+    return test_u1
+
+
+def expected_count(group_name, objects=False):
+    repos_group = RepoGroup.get_by_group_name(group_name=group_name)
+    objs = repos_group.recursive_groups_and_repos()
+    if objects:
+        return objs
+    return len(objs)
+
+
+def _check_expected_count(items, repo_items, expected):
+    should_be = len(items + repo_items)
+    there_are = len(expected)
+    assert  should_be == there_are, ('%s != %s' % ((items + repo_items), expected))
+
+
+def check_tree_perms(obj_name, repo_perm, prefix, expected_perm):
+    assert repo_perm == expected_perm, ('obj:`%s` got perm:`%s` should:`%s`'
+                                    % (obj_name, repo_perm, expected_perm))
+
+
+def _get_perms(filter_='', recursive=True, key=None, test_u1_id=None):
+    test_u1 = AuthUser(user_id=test_u1_id)
+    for k, v in test_u1.permissions[key].items():
+        if recursive and k.startswith(filter_):
+            yield k, v
+        elif not recursive:
+            if k == filter_:
+                yield k, v
diff --git a/rhodecode/tests/models/test_permissions.py b/rhodecode/tests/models/test_permissions.py
--- a/rhodecode/tests/models/test_permissions.py
+++ b/rhodecode/tests/models/test_permissions.py
@@ -1,7 +1,7 @@
 import os
 import unittest
 from rhodecode.tests import *
-
+from rhodecode.tests.models.common import _make_group
 from rhodecode.model.repos_group import ReposGroupModel
 from rhodecode.model.repo import RepoModel
 from rhodecode.model.db import RepoGroup, User, UsersGroupRepoGroupToPerm
@@ -12,16 +12,6 @@ from rhodecode.model.users_group import 
 from rhodecode.lib.auth import AuthUser
 
 
-def _make_group(path, desc='desc', parent_id=None,
-                 skip_if_exists=False):
-
-    gr = RepoGroup.get_by_group_name(path)
-    if gr and skip_if_exists:
-        return gr
-
-    gr = ReposGroupModel().create(path, desc, parent_id)
-    return gr
-
 
 class TestPermissions(unittest.TestCase):
     def __init__(self, methodName='runTest'):
diff --git a/rhodecode/tests/models/test_repos_groups.py b/rhodecode/tests/models/test_repos_groups.py
--- a/rhodecode/tests/models/test_repos_groups.py
+++ b/rhodecode/tests/models/test_repos_groups.py
@@ -4,7 +4,7 @@ from rhodecode.tests import *
 
 from rhodecode.model.repos_group import ReposGroupModel
 from rhodecode.model.repo import RepoModel
-from rhodecode.model.db import RepoGroup, User
+from rhodecode.model.db import RepoGroup, User, Repository
 from rhodecode.model.meta import Session
 from sqlalchemy.exc import IntegrityError
 
@@ -15,7 +15,8 @@ def _make_group(path, desc='desc', paren
     gr = RepoGroup.get_by_group_name(path)
     if gr and skip_if_exists:
         return gr
-
+    if isinstance(parent_id, RepoGroup):
+        parent_id = parent_id.group_id
     gr = ReposGroupModel().create(path, desc, parent_id)
     return gr
 
@@ -54,7 +55,8 @@ class TestReposGroups(unittest.TestCase)
             group_parent_id=parent_id,
             perms_updates=[],
             perms_new=[],
-            enable_locking=False
+            enable_locking=False,
+            recursive=False
         )
         gr = ReposGroupModel().update(id_, form_data)
         return gr
@@ -132,7 +134,8 @@ class TestReposGroups(unittest.TestCase)
                          repo_type='hg',
                          clone_uri=None,
                          landing_rev='tip',
-                         enable_locking=False)
+                         enable_locking=False,
+                         recursive=False)
         cur_user = User.get_by_username(TEST_USER_ADMIN_LOGIN)
         r = RepoModel().create(form_data, cur_user)
 
diff --git a/rhodecode/tests/models/test_user_permissions_on_groups.py b/rhodecode/tests/models/test_user_permissions_on_groups.py
new file mode 100644
--- /dev/null
+++ b/rhodecode/tests/models/test_user_permissions_on_groups.py
@@ -0,0 +1,161 @@
+import os
+import unittest
+import functools
+from rhodecode.tests import *
+
+from rhodecode.model.repos_group import ReposGroupModel
+from rhodecode.model.db import RepoGroup, Repository, User
+
+from rhodecode.model.meta import Session
+from nose.tools import with_setup
+from rhodecode.tests.models.common import _create_project_tree, check_tree_perms, \
+    _get_perms, _check_expected_count, expected_count, _destroy_project_tree
+from rhodecode.model.repo import RepoModel
+
+
+test_u1_id = None
+_get_repo_perms = None
+_get_group_perms = None
+
+
+def permissions_setup_func(group_name='g0', perm='group.read', recursive=True):
+    """
+    Resets all permissions to perm attribute
+    """
+    repos_group = RepoGroup.get_by_group_name(group_name=group_name)
+    if not repos_group:
+        raise Exception('Cannot get group %s' % group_name)
+    perms_updates = [[test_u1_id, perm, 'user']]
+    ReposGroupModel()._update_permissions(repos_group,
+                                          perms_updates=perms_updates,
+                                          recursive=recursive)
+    Session().commit()
+
+
+def setup_module():
+    global test_u1_id, _get_repo_perms, _get_group_perms
+    test_u1 = _create_project_tree()
+    Session().commit()
+    test_u1_id = test_u1.user_id
+    _get_repo_perms = functools.partial(_get_perms, key='repositories',
+                                        test_u1_id=test_u1_id)
+    _get_group_perms = functools.partial(_get_perms, key='repositories_groups',
+                                         test_u1_id=test_u1_id)
+
+
+def teardown_module():
+    _destroy_project_tree(test_u1_id)
+
+
+@with_setup(permissions_setup_func)
+def test_user_permissions_on_group_without_recursive_mode():
+    # set permission to g0 non-recursive mode
+    recursive = False
+    group = 'g0'
+    permissions_setup_func(group, 'group.write', recursive=recursive)
+
+    items = [x for x in _get_repo_perms(group, recursive)]
+    expected = 0
+    assert len(items) == expected, ' %s != %s' % (len(items), expected)
+    for name, perm in items:
+        yield check_tree_perms, name, perm, group, 'repository.read'
+
+    items = [x for x in _get_group_perms(group, recursive)]
+    expected = 1
+    assert len(items) == expected, ' %s != %s' % (len(items), expected)
+    for name, perm in items:
+        yield check_tree_perms, name, perm, group, 'group.write'
+
+
+@with_setup(permissions_setup_func)
+def test_user_permissions_on_group_without_recursive_mode_subgroup():
+    # set permission to g0 non-recursive mode
+    recursive = False
+    group = 'g0/g0_1'
+    permissions_setup_func(group, 'group.write', recursive=recursive)
+
+    items = [x for x in _get_repo_perms(group, recursive)]
+    expected = 0
+    assert len(items) == expected, ' %s != %s' % (len(items), expected)
+    for name, perm in items:
+        yield check_tree_perms, name, perm, group, 'repository.read'
+
+    items = [x for x in _get_group_perms(group, recursive)]
+    expected = 1
+    assert len(items) == expected, ' %s != %s' % (len(items), expected)
+    for name, perm in items:
+        yield check_tree_perms, name, perm, group, 'group.write'
+
+
+@with_setup(permissions_setup_func)
+def test_user_permissions_on_group_with_recursive_mode():
+
+    # set permission to g0 recursive mode, all children including
+    # other repos and groups should have this permission now set !
+    recursive = True
+    group = 'g0'
+    permissions_setup_func(group, 'group.write', recursive=recursive)
+
+    repo_items = [x for x in _get_repo_perms(group, recursive)]
+    items = [x for x in _get_group_perms(group, recursive)]
+    _check_expected_count(items, repo_items, expected_count(group, True))
+
+    for name, perm in repo_items:
+        yield check_tree_perms, name, perm, group, 'repository.write'
+
+    for name, perm in items:
+        yield check_tree_perms, name, perm, group, 'group.write'
+
+
+@with_setup(permissions_setup_func)
+def test_user_permissions_on_group_with_recursive_mode_inner_group():
+    ## set permission to g0_3 group to none
+    recursive = True
+    group = 'g0/g0_3'
+    permissions_setup_func(group, 'group.none', recursive=recursive)
+
+    repo_items = [x for x in _get_repo_perms(group, recursive)]
+    items = [x for x in _get_group_perms(group, recursive)]
+    _check_expected_count(items, repo_items, expected_count(group, True))
+
+    for name, perm in repo_items:
+        yield check_tree_perms, name, perm, group, 'repository.none'
+
+    for name, perm in items:
+        yield check_tree_perms, name, perm, group, 'group.none'
+
+
+@with_setup(permissions_setup_func)
+def test_user_permissions_on_group_with_recursive_mode_deepest():
+    ## set permission to g0_3 group to none
+    recursive = True
+    group = 'g0/g0_1/g0_1_1'
+    permissions_setup_func(group, 'group.write', recursive=recursive)
+
+    repo_items = [x for x in _get_repo_perms(group, recursive)]
+    items = [x for x in _get_group_perms(group, recursive)]
+    _check_expected_count(items, repo_items, expected_count(group, True))
+
+    for name, perm in repo_items:
+        yield check_tree_perms, name, perm, group, 'repository.write'
+
+    for name, perm in items:
+        yield check_tree_perms, name, perm, group, 'group.write'
+
+
+@with_setup(permissions_setup_func)
+def test_user_permissions_on_group_with_recursive_mode_only_with_repos():
+    ## set permission to g0_3 group to none
+    recursive = True
+    group = 'g0/g0_2'
+    permissions_setup_func(group, 'group.admin', recursive=recursive)
+
+    repo_items = [x for x in _get_repo_perms(group, recursive)]
+    items = [x for x in _get_group_perms(group, recursive)]
+    _check_expected_count(items, repo_items, expected_count(group, True))
+
+    for name, perm in repo_items:
+        yield check_tree_perms, name, perm, group, 'repository.admin'
+
+    for name, perm in items:
+        yield check_tree_perms, name, perm, group, 'group.admin'
diff --git a/rhodecode/tests/models/test_users_group_permissions_on_groups.py b/rhodecode/tests/models/test_users_group_permissions_on_groups.py
new file mode 100644
--- /dev/null
+++ b/rhodecode/tests/models/test_users_group_permissions_on_groups.py
@@ -0,0 +1,170 @@
+import os
+import unittest
+import functools
+from rhodecode.tests import *
+
+from rhodecode.model.repos_group import ReposGroupModel
+from rhodecode.model.db import RepoGroup, Repository, User
+
+from rhodecode.model.meta import Session
+from nose.tools import with_setup
+from rhodecode.tests.models.common import _create_project_tree, check_tree_perms, \
+    _get_perms, _check_expected_count, expected_count, _destroy_project_tree
+from rhodecode.model.users_group import UsersGroupModel
+from rhodecode.model.repo import RepoModel
+
+
+test_u2_id = None
+test_u2_gr_id = None
+_get_repo_perms = None
+_get_group_perms = None
+
+
+def permissions_setup_func(group_name='g0', perm='group.read', recursive=True):
+    """
+    Resets all permissions to perm attribute
+    """
+    repos_group = RepoGroup.get_by_group_name(group_name=group_name)
+    if not repos_group:
+        raise Exception('Cannot get group %s' % group_name)
+    perms_updates = [[test_u2_gr_id, perm, 'users_group']]
+    ReposGroupModel()._update_permissions(repos_group,
+                                          perms_updates=perms_updates,
+                                          recursive=recursive)
+    Session().commit()
+
+
+def setup_module():
+    global test_u2_id, test_u2_gr_id, _get_repo_perms, _get_group_perms
+    test_u2 = _create_project_tree()
+    Session().commit()
+    test_u2_id = test_u2.user_id
+
+    gr1 = UsersGroupModel().create(name='perms_group_1')
+    Session().commit()
+    test_u2_gr_id = gr1.users_group_id
+    UsersGroupModel().add_user_to_group(gr1, user=test_u2_id)
+    Session().commit()
+
+    _get_repo_perms = functools.partial(_get_perms, key='repositories',
+                                        test_u1_id=test_u2_id)
+    _get_group_perms = functools.partial(_get_perms, key='repositories_groups',
+                                         test_u1_id=test_u2_id)
+
+
+def teardown_module():
+    _destroy_project_tree(test_u2_id)
+
+
+@with_setup(permissions_setup_func)
+def test_user_permissions_on_group_without_recursive_mode():
+    # set permission to g0 non-recursive mode
+    recursive = False
+    group = 'g0'
+    permissions_setup_func(group, 'group.write', recursive=recursive)
+
+    items = [x for x in _get_repo_perms(group, recursive)]
+    expected = 0
+    assert len(items) == expected, ' %s != %s' % (len(items), expected)
+    for name, perm in items:
+        yield check_tree_perms, name, perm, group, 'repository.read'
+
+    items = [x for x in _get_group_perms(group, recursive)]
+    expected = 1
+    assert len(items) == expected, ' %s != %s' % (len(items), expected)
+    for name, perm in items:
+        yield check_tree_perms, name, perm, group, 'group.write'
+
+
+@with_setup(permissions_setup_func)
+def test_user_permissions_on_group_without_recursive_mode_subgroup():
+    # set permission to g0 non-recursive mode
+    recursive = False
+    group = 'g0/g0_1'
+    permissions_setup_func(group, 'group.write', recursive=recursive)
+
+    items = [x for x in _get_repo_perms(group, recursive)]
+    expected = 0
+    assert len(items) == expected, ' %s != %s' % (len(items), expected)
+    for name, perm in items:
+        yield check_tree_perms, name, perm, group, 'repository.read'
+
+    items = [x for x in _get_group_perms(group, recursive)]
+    expected = 1
+    assert len(items) == expected, ' %s != %s' % (len(items), expected)
+    for name, perm in items:
+        yield check_tree_perms, name, perm, group, 'group.write'
+
+
+@with_setup(permissions_setup_func)
+def test_user_permissions_on_group_with_recursive_mode():
+
+    # set permission to g0 recursive mode, all children including
+    # other repos and groups should have this permission now set !
+    recursive = True
+    group = 'g0'
+    permissions_setup_func(group, 'group.write', recursive=recursive)
+
+    repo_items = [x for x in _get_repo_perms(group, recursive)]
+    items = [x for x in _get_group_perms(group, recursive)]
+    _check_expected_count(items, repo_items, expected_count(group, True))
+
+    for name, perm in repo_items:
+        yield check_tree_perms, name, perm, group, 'repository.write'
+
+    for name, perm in items:
+        yield check_tree_perms, name, perm, group, 'group.write'
+
+
+@with_setup(permissions_setup_func)
+def test_user_permissions_on_group_with_recursive_mode_inner_group():
+    ## set permission to g0_3 group to none
+    recursive = True
+    group = 'g0/g0_3'
+    permissions_setup_func(group, 'group.none', recursive=recursive)
+
+    repo_items = [x for x in _get_repo_perms(group, recursive)]
+    items = [x for x in _get_group_perms(group, recursive)]
+    _check_expected_count(items, repo_items, expected_count(group, True))
+
+    for name, perm in repo_items:
+        yield check_tree_perms, name, perm, group, 'repository.none'
+
+    for name, perm in items:
+        yield check_tree_perms, name, perm, group, 'group.none'
+
+
+@with_setup(permissions_setup_func)
+def test_user_permissions_on_group_with_recursive_mode_deepest():
+    ## set permission to g0_3 group to none
+    recursive = True
+    group = 'g0/g0_1/g0_1_1'
+    permissions_setup_func(group, 'group.write', recursive=recursive)
+
+    repo_items = [x for x in _get_repo_perms(group, recursive)]
+    items = [x for x in _get_group_perms(group, recursive)]
+    _check_expected_count(items, repo_items, expected_count(group, True))
+
+    for name, perm in repo_items:
+        yield check_tree_perms, name, perm, group, 'repository.write'
+
+    for name, perm in items:
+        yield check_tree_perms, name, perm, group, 'group.write'
+
+
+@with_setup(permissions_setup_func)
+def test_user_permissions_on_group_with_recursive_mode_only_with_repos():
+    ## set permission to g0_3 group to none
+    recursive = True
+    group = 'g0/g0_2'
+    permissions_setup_func(group, 'group.admin', recursive=recursive)
+
+    repo_items = [x for x in _get_repo_perms(group, recursive)]
+    items = [x for x in _get_group_perms(group, recursive)]
+    _check_expected_count(items, repo_items, expected_count(group, True))
+
+    for name, perm in repo_items:
+        yield check_tree_perms, name, perm, group, 'repository.admin'
+
+    for name, perm in items:
+        yield check_tree_perms, name, perm, group, 'group.admin'