diff --git a/rm-community/rm-community-repo/config/alfresco/module/org_alfresco_module_rm/action-context.xml b/rm-community/rm-community-repo/config/alfresco/module/org_alfresco_module_rm/action-context.xml
index 52797d1848..e7358d2770 100644
--- a/rm-community/rm-community-repo/config/alfresco/module/org_alfresco_module_rm/action-context.xml
+++ b/rm-community/rm-community-repo/config/alfresco/module/org_alfresco_module_rm/action-context.xml
@@ -28,6 +28,7 @@
       <property name="dictionaryService" ref="DictionaryService" />
       <property name="authenticationUtil" ref="rm.authenticationUtil" />
       <property name="recordService" ref="RecordService" />
+      <property name="capabilityService" ref="CapabilityService" />
       <property name="applicableTypes">
          <list>
             <value>{http://www.alfresco.org/model/content/1.0}content</value>
diff --git a/rm-community/rm-community-repo/config/alfresco/module/org_alfresco_module_rm/capability/rm-capabilities-record-context.xml b/rm-community/rm-community-repo/config/alfresco/module/org_alfresco_module_rm/capability/rm-capabilities-record-context.xml
index 40a454449b..6fcab797ad 100644
--- a/rm-community/rm-community-repo/config/alfresco/module/org_alfresco_module_rm/capability/rm-capabilities-record-context.xml
+++ b/rm-community/rm-community-repo/config/alfresco/module/org_alfresco_module_rm/capability/rm-capabilities-record-context.xml
@@ -158,7 +158,12 @@
       parent="declarativeCapability">
       <property name="name" value="FileUnfiledRecords"/>
       <property name="permission" value="FileUnfiledRecords"/>
-      <property name="kind" value="RECORD" />
+      <property name="kinds">
+         <list>
+            <value>RECORD_FOLDER</value>
+            <value>RECORD</value>
+         </list>
+      </property>
       <property name="conditions">
          <map>
             <entry key="capabilityCondition.filling" value="true"/>  		<!--  Checks if the user has the filling capability -->
diff --git a/rm-community/rm-community-repo/source/java/org/alfresco/module/org_alfresco_module_rm/action/dm/DeclareAsVersionRecordAction.java b/rm-community/rm-community-repo/source/java/org/alfresco/module/org_alfresco_module_rm/action/dm/DeclareAsVersionRecordAction.java
index da16aea68a..6cb62888db 100644
--- a/rm-community/rm-community-repo/source/java/org/alfresco/module/org_alfresco_module_rm/action/dm/DeclareAsVersionRecordAction.java
+++ b/rm-community/rm-community-repo/source/java/org/alfresco/module/org_alfresco_module_rm/action/dm/DeclareAsVersionRecordAction.java
@@ -30,12 +30,12 @@ package org.alfresco.module.org_alfresco_module_rm.action.dm;
 import java.util.HashMap;
 import java.util.List;
 import java.util.Map;
-import java.util.Map.Entry;
 
 import org.alfresco.error.AlfrescoRuntimeException;
 import org.alfresco.model.ContentModel;
 import org.alfresco.module.org_alfresco_module_rm.action.AuditableActionExecuterAbstractBase;
 import org.alfresco.module.org_alfresco_module_rm.action.dm.RecordActionUtils.Services;
+import org.alfresco.module.org_alfresco_module_rm.capability.CapabilityService;
 import org.alfresco.module.org_alfresco_module_rm.fileplan.FilePlanService;
 import org.alfresco.module.org_alfresco_module_rm.model.RecordsManagementModel;
 import org.alfresco.module.org_alfresco_module_rm.record.RecordService;
@@ -49,7 +49,6 @@ import org.alfresco.service.cmr.dictionary.DictionaryService;
 import org.alfresco.service.cmr.repository.NodeRef;
 import org.alfresco.service.cmr.repository.NodeService;
 import org.alfresco.service.namespace.QName;
-import org.apache.commons.collections.map.HashedMap;
 import org.apache.commons.logging.Log;
 import org.apache.commons.logging.LogFactory;
 
@@ -73,6 +72,8 @@ public class DeclareAsVersionRecordAction extends AuditableActionExecuterAbstrac
     public static final String PARAM_FILE_PLAN = "file-plan";
     public static final String PARAM_PATH = "path";
 
+    private static final String FILE_UNFILED_RECORDS_CAPABILITY = "FileUnfiledRecords";
+
     /** Sync Model URI */
     private static final String SYNC_MODEL_1_0_URI = "http://www.alfresco.org/model/sync/1.0";
     
@@ -88,15 +89,17 @@ public class DeclareAsVersionRecordAction extends AuditableActionExecuterAbstrac
     /** Dictionary service */
     private DictionaryService dictionaryService;
     
-    /** recordable version service */
+    /** Recordable version service */
     private RecordableVersionService recordableVersionService;
     
-    /** authentication util */
+    /** Authentication util */
     private AuthenticationUtil authenticationUtil;
 
     /** Record service */
     private RecordService recordService;
 
+    /** Capability service */
+    private CapabilityService capabilityService;
 
     /**
      * @param nodeService   node service
@@ -146,6 +149,11 @@ public class DeclareAsVersionRecordAction extends AuditableActionExecuterAbstrac
         this.recordService = recordService;
     }
 
+    public void setCapabilityService(CapabilityService capabilityService)
+    {
+        this.capabilityService = capabilityService;
+    }
+
     /**
      * @see org.alfresco.repo.action.executer.ActionExecuterAbstractBase#executeImpl(org.alfresco.service.cmr.action.Action, org.alfresco.service.cmr.repository.NodeRef)
      */
@@ -219,8 +227,13 @@ public class DeclareAsVersionRecordAction extends AuditableActionExecuterAbstrac
             // create record from latest version
             if (destinationRecordFolder != null)
             {
-                NodeRef recordedVersion = recordableVersionService.createRecordFromLatestVersion(destinationRecordFolder, actionedUponNodeRef);
-                recordService.file(recordedVersion);
+                boolean hasFilingCapability = capabilityService.hasCapability(destinationRecordFolder, FILE_UNFILED_RECORDS_CAPABILITY);
+                // validate destination record folder
+                if (hasFilingCapability)
+                {
+                    NodeRef recordedVersion = recordableVersionService.createRecordFromLatestVersion(destinationRecordFolder, actionedUponNodeRef);
+                    recordService.file(recordedVersion);
+                }
             }
             else
             {
@@ -271,5 +284,4 @@ public class DeclareAsVersionRecordAction extends AuditableActionExecuterAbstrac
         }
         return false;
     }
-
 }