diff --git a/compiler/src/dotty/tools/dotc/core/CheckRealizable.scala b/compiler/src/dotty/tools/dotc/core/CheckRealizable.scala
index 774cc233bff8..788b6d474999 100644
--- a/compiler/src/dotty/tools/dotc/core/CheckRealizable.scala
+++ b/compiler/src/dotty/tools/dotc/core/CheckRealizable.scala
@@ -74,11 +74,13 @@ class CheckRealizable(implicit ctx: Context) {
       else {
         val r =
           if (!sym.isStable) NotStable
-          else if (!isLateInitialized(sym)) realizability(tp.prefix)
+          else if (!isLateInitialized(sym)) Realizable
           else if (!sym.isEffectivelyFinal) new NotFinal(sym)
           else realizability(tp.info).mapError(r => new ProblemInUnderlying(tp.info, r))
-        if (r == Realizable) sym.setFlag(Stable)
-        r
+        r andAlso {
+          sym.setFlag(Stable)
+          realizability(tp.prefix)
+        }
       }
     case _: SingletonType | NoPrefix =>
       Realizable
diff --git a/tests/neg/i5521.scala b/tests/neg/i5521.scala
new file mode 100644
index 000000000000..9edb43605036
--- /dev/null
+++ b/tests/neg/i5521.scala
@@ -0,0 +1,12 @@
+class Hello {
+  class Foo {
+    class Bar
+    final lazy val s: Bar = ???
+  }
+
+  lazy val foo: Foo = ???
+
+  val x: foo.s.type = ???   // error: `foo` must be final since it's a lazy val
+  val x2: foo.s.type = ???  // error: `foo` must be final since it's a lazy val
+}
+