diff --git a/neo.UnitTests/SmartContract/UT_InteropService.NEO.cs b/neo.UnitTests/SmartContract/UT_InteropService.NEO.cs
index 703fc6241e..243cfa89ef 100644
--- a/neo.UnitTests/SmartContract/UT_InteropService.NEO.cs
+++ b/neo.UnitTests/SmartContract/UT_InteropService.NEO.cs
@@ -240,6 +240,18 @@ public void TestContract_Update()
             engine.CurrentContext.EvaluationStack.Push(manifest.ToString());
             engine.CurrentContext.EvaluationStack.Push(script);
             InteropService.Invoke(engine, InteropService.Neo_Contract_Update).Should().BeTrue();
+
+            // Remove Storage flag with something stored
+
+            state.Manifest.Features = ContractFeatures.NoProperty;
+            mockSnapshot.SetupGet(p => p.Contracts).Returns(new TestDataCache<UInt160, ContractState>(state.ScriptHash, state));
+            mockSnapshot.SetupGet(p => p.Storages).Returns(new TestDataCache<StorageKey, StorageItem>(storageKey, storageItem));
+
+            engine = new ApplicationEngine(TriggerType.Application, null, mockSnapshot.Object, 0);
+            engine.LoadScript(state.Script);
+            engine.CurrentContext.EvaluationStack.Push(manifest.ToString());
+            engine.CurrentContext.EvaluationStack.Push(script);
+            InteropService.Invoke(engine, InteropService.Neo_Contract_Update).Should().BeFalse();
         }
 
         [TestMethod]
diff --git a/neo/SmartContract/InteropService.NEO.cs b/neo/SmartContract/InteropService.NEO.cs
index 90a49a4df2..212d1091b6 100644
--- a/neo/SmartContract/InteropService.NEO.cs
+++ b/neo/SmartContract/InteropService.NEO.cs
@@ -236,6 +236,7 @@ private static bool Contract_Update(ApplicationEngine engine)
                 contract = engine.Snapshot.Contracts.GetAndChange(contract.ScriptHash);
                 contract.Manifest = ContractManifest.Parse(manifest);
                 if (!contract.Manifest.IsValid(contract.ScriptHash)) return false;
+                if (!contract.HasStorage && engine.Snapshot.Storages.Find(engine.CurrentScriptHash.ToArray()).Any()) return false;
             }
 
             return true;