diff --git a/lib/api/runner.rb b/lib/api/runner.rb
index 5b7ae89440c..e9886c76870 100644
--- a/lib/api/runner.rb
+++ b/lib/api/runner.rb
@@ -21,24 +21,26 @@ module API
         attributes = attributes_for_keys([:description, :active, :locked, :run_untagged, :tag_list, :maximum_timeout])
           .merge(get_runner_details_from_request)
 
-        runner =
+        attributes =
           if runner_registration_token_valid?
             # Create shared runner. Requires admin access
-            Ci::Runner.create(attributes.merge(is_shared: true, runner_type: :instance_type))
+            attributes.merge(is_shared: true, runner_type: :instance_type)
           elsif project = Project.find_by(runners_token: params[:token])
             # Create a specific runner for the project
-            project.runners.create(attributes.merge(runner_type: :project_type))
+            attributes.merge(is_shared: false, runner_type: :project_type, projects: [project])
           elsif group = Group.find_by(runners_token: params[:token])
             # Create a specific runner for the group
-            group.runners.create(attributes.merge(runner_type: :group_type))
+            attributes.merge(is_shared: false, runner_type: :group_type, groups: [group])
+          else
+            forbidden!
           end
 
-        break forbidden! unless runner
+        runner = Ci::Runner.create(attributes)
 
-        if runner.id
+        if runner.persisted?
           present runner, with: Entities::RunnerRegistrationDetails
         else
-          not_found!
+          render_validation_error!(runner)
         end
       end
 
diff --git a/spec/requests/api/runner_spec.rb b/spec/requests/api/runner_spec.rb
index c3c8d95dded..c63d894e3dd 100644
--- a/spec/requests/api/runner_spec.rb
+++ b/spec/requests/api/runner_spec.rb
@@ -115,7 +115,9 @@ describe API::Runner, :clean_gitlab_redis_shared_state do
             post api('/runners'), token: registration_token,
                                   run_untagged: false
 
-            expect(response).to have_gitlab_http_status 404
+            expect(response).to have_gitlab_http_status 400
+            expect(json_response['message']).to include(
+              'tags_list' => ['can not be empty when runner is not allowed to pick untagged jobs'])
           end
         end
       end
@@ -720,7 +722,7 @@ describe API::Runner, :clean_gitlab_redis_shared_state do
               end
 
               context 'when runner specifies lower timeout' do
-                let(:runner) { create(:ci_runner, maximum_timeout: 1000) }
+                let(:runner) { create(:ci_runner, :project, maximum_timeout: 1000, projects: [project]) }
 
                 it 'contains info about timeout overridden by runner' do
                   request_job
@@ -731,7 +733,7 @@ describe API::Runner, :clean_gitlab_redis_shared_state do
               end
 
               context 'when runner specifies bigger timeout' do
-                let(:runner) { create(:ci_runner, maximum_timeout: 2000) }
+                let(:runner) { create(:ci_runner, :project, maximum_timeout: 2000, projects: [project]) }
 
                 it 'contains info about timeout not overridden by runner' do
                   request_job