diff --git a/bin/bitbake-setup b/bin/bitbake-setup
index 93c11bd09..abe7614c8 100755
--- a/bin/bitbake-setup
+++ b/bin/bitbake-setup
@@ -104,7 +104,7 @@ def add_unique_timestamp_to_path(path):
                 break
     return path_unique
 
-def checkout_layers(layers, layerdir, d):
+def checkout_layers(layers, confdir, layerdir, d):
     def _checkout_git_remote(r_remote, repodir, layers_fixed_revisions):
         rev = r_remote['rev']
         branch = r_remote.get('branch', None)
@@ -128,6 +128,31 @@ def checkout_layers(layers, layerdir, d):
         logger.plain("Making a symbolic link {} pointing to {}".format(dst, src))
         os.symlink(src, dst)
 
+    def _has_local_modifications(r_name, r_path):
+        fixed_revisions = json.load(open(os.path.join(confdir, "sources-fixed-revisions.json")))
+        rev = fixed_revisions['sources'][r_name]['git-remote']['rev']
+        status = bb.process.run('git -C {} status --porcelain'.format(r_path))[0]
+        if status:
+            return True
+        diff = bb.process.run('git -C {} diff {}'.format(r_path, rev))[0]
+        if diff:
+            return True
+        return False
+
+    def _restrict_commits(r_name, r_path):
+        hook_path = os.path.join(r_path, '.git', 'hooks', 'pre-commit')
+        restrict_hook = """#!/bin/sh
+echo "This repository is managed by bitbake-setup, and making commits is restricted.
+If you wish to make local modifications, clone it separately, and re-initialize using
+bitbake-setup init -L {} /path/to/repo/checkout"
+exit 1
+""".format(r_name)
+        with open(hook_path, 'w') as f:
+            f.write(restrict_hook)
+        import stat
+        st = os.stat(hook_path)
+        os.chmod(hook_path, st.st_mode | stat.S_IEXEC)
+
     layers_fixed_revisions = copy.deepcopy(layers)
     repodirs = []
     oesetupbuild = None
@@ -141,10 +166,26 @@ def checkout_layers(layers, layerdir, d):
         r_local = r_data.get('local')
         if r_remote and r_local:
             raise Exception("Source {} contains both git-remote and local properties.".format(r_name))
+
+        repodir_path = os.path.join(layerdir, repodir)
+        if os.path.lexists(repodir_path):
+            if os.path.islink(repodir_path):
+                os.remove(repodir_path)
+            elif _has_local_modifications(r_name, repodir_path):
+                backup_path = add_unique_timestamp_to_path(repodir_path + '-backup')
+                logger.warning("""Source {} in {} contains local modifications. Renaming to {} to preserve them.
+For local development work it is recommended to clone the needed layers separately and re-initialize using -L option:
+bitbake-setup init -L {} /path/to/repo/checkout""".format(
+                    r_name, repodir_path, backup_path, r_name))
+                os.rename(repodir_path, backup_path)
+            else:
+                shutil.rmtree(repodir_path)
+
         if r_remote:
             _checkout_git_remote(r_remote, repodir, layers_fixed_revisions)
+            _restrict_commits(r_name, repodir_path)
         if r_local:
-            _symlink_local(os.path.expanduser(r_local["path"]), os.path.join(layerdir,repodir))
+            _symlink_local(os.path.expanduser(r_local["path"]), repodir_path)
 
         if os.path.exists(os.path.join(layerdir, repodir, 'scripts/oe-setup-build')):
             oesetupbuild = os.path.join(layerdir, repodir, 'scripts/oe-setup-build')
@@ -354,7 +395,7 @@ def merge_overrides_into_sources(sources, overrides):
 
 def update_build(config, confdir, setupdir, layerdir, d, update_bb_conf="prompt"):
     layer_config = merge_overrides_into_sources(config["data"]["sources"], config["source-overrides"]["sources"])
-    sources_fixed_revisions = checkout_layers(layer_config, layerdir, d)
+    sources_fixed_revisions = checkout_layers(layer_config, confdir, layerdir, d)
     bitbake_config = config["bitbake-config"]
     thisdir = os.path.dirname(config["path"]) if config["type"] == 'local' else None
     setup_bitbake_build(bitbake_config, layerdir, setupdir, thisdir, update_bb_conf)