diff --git a/ehdd/start-encrypted.sh b/ehdd/start-encrypted.sh
index 5492fc6b..0cd5b644 100755
--- a/ehdd/start-encrypted.sh
+++ b/ehdd/start-encrypted.sh
@@ -35,5 +35,6 @@ if [ $? -eq 0 ]; then
     ehdd/postinstall.sh || exit 1
 else
     echo "setup/start.sh failed"
+    exit 1
 fi
 
diff --git a/management/hooks.py b/management/hooks.py
index bc286ff7..526bcf3c 100644
--- a/management/hooks.py
+++ b/management/hooks.py
@@ -20,12 +20,29 @@ log = logging.getLogger(__name__)
 # update_hook_handlers() for the format
 #
 mutex = Lock()
+initialized = False
 handlers = [] 
-mods_env = {}  # dict derived from /etc/mailinabox_mods.conf
+mods_env = {}  # dict of /etc/mailinabox.conf and /etc/mailinabox_mods.conf
 
 def update_hook_handlers():
 	global handlers, mods_env
+
+	# load /etc/mailinabox.conf and /etc/mailinabox_mods.conf
+	new_mods_env = load_environment()
+	if os.path.isfile('/etc/mailinabox_mods.conf'):    
+		load_env_vars_from_file(
+			'/etc/mailinabox_mods.conf',
+			strip_quotes=True,
+			merge_env=new_mods_env
+		)
+
 	new_handlers= []
+
+	if 'LOCAL_MODS_DIR' in new_mods_env:
+		dir = new_mods_env['LOCAL_MODS_DIR']
+		if dir not in sys.path:
+			sys.path.append(dir)
+						
 	for dir in sys.path:
 		hooks_dir = os.path.join(dir, "management_hooks_d")
 		if not os.path.isdir(hooks_dir):
@@ -47,19 +64,11 @@ def update_hook_handlers():
 	new_handlers = sorted(new_handlers, key=lambda path: path['sort_id'])
 	log.info('%s hook handlers', len(new_handlers))
 
-	# load /etc/mailinabox_mods.conf
-	new_mods_env = load_environment()
-	if os.path.isfile('/etc/mailinabox_mods.conf'):    
-		load_env_vars_from_file(
-			'/etc/mailinabox_mods.conf',
-			strip_quotes=True,
-			merge_env=new_mods_env
-		)
-
 	# update globals
 	mutex.acquire()
 	handlers = new_handlers
 	mods_env = new_mods_env
+	initialized = True
 	mutex.release()
 
 
@@ -68,6 +77,9 @@ def exec_hooks(hook_name, data):
 	# contents of which are specific to the type of hook. Handlers may
 	# modify the dictionary to return updates to the caller.
 
+	if not initialized:
+		update_hook_handlers()
+		
 	mutex.acquire()
 	cur_handlers = handlers
 	cur_mods_env = mods_env
diff --git a/setup/functions.sh b/setup/functions.sh
index e0d218e7..749c916c 100644
--- a/setup/functions.sh
+++ b/setup/functions.sh
@@ -317,18 +317,54 @@ say() {
 	echo "$@"
 }
 
+wait_for_management_daemon() {
+	local progress="${1:-progress}" # show progress? "progress"/"no-progress"
+	local max_wait="${2:-60}" # seconds, 0=forever
+	local start=$(date +%s)
+	local elapsed=0 now
+	[ "$max_wait" = "forever" ] && max_wait=0
+	
+	# Wait for the management daemon to start...
+	until nc -z -w 4 127.0.0.1 10222
+	do
+		now=$(date +%s)
+		# let returns 1 if the equasion evaluates to zero, which will
+		# cause the script to exit because of set -e. add one.
+		[ $now -eq $start ] && let now+=1
+		let elapsed="$now - $start"
+		if [ $max_wait -ne 0 -a $elapsed -gt $max_wait ]; then
+			echo "Timeout waiting for Mail-in-a-Box management daemon to start"
+			return 1
+		fi
+		if [ "$progress" = "progress" ]; then
+			echo Waiting for the Mail-in-a-Box management daemon to start...
+		fi
+		sleep 2
+	done
+}
+
 install_hook_handler() {
 	# this is used by local setup mods to install a hook handler for
-	# the management daemon
+	# the management daemon. source /etc/mailinabox.conf before
+	# calling
 	local handler_file="$1"
 	local dst="${LOCAL_MODS_DIR:-local}/management_hooks_d"
-	mkdir -p "$dst"	
-	cp "$handler_file" "$dst"
-	# let the daemon know there's a new hook handler
-	tools/hooks_update >/dev/null
+	if [ ! -d "$dst" -o -e "$dst/$(basename "$handler_file")" ]; then
+		mkdir -p "$dst"
+		cp "$handler_file" "$dst"
+		if systemctl is-active --quiet mailinabox; then
+			systemctl restart mailinabox
+			wait_for_management_daemon no-progress
+		fi
+	else
+		cp "$handler_file" "$dst"
+		# let the daemon know there's a new hook handler
+		tools/hooks_update >/dev/null
+	fi
 }
 
 remove_hook_handler() {
+	# source /etc/mailinabox.conf before calling
 	local hook_py=$(basename "$1")
 	local dst="${LOCAL_MODS_DIR:-local}/management_hooks_d/$hook_py"
 	if [ -e "$dst" ]; then
diff --git a/setup/management.sh b/setup/management.sh
index 385390bd..b2447c69 100755
--- a/setup/management.sh
+++ b/setup/management.sh
@@ -103,7 +103,7 @@ tr -cd '[:xdigit:]' < /dev/urandom | head -c 32 > /var/lib/mailinabox/api.key
 chmod 640 /var/lib/mailinabox/api.key
 
 source $venv/bin/activate
-export PYTHONPATH=$(pwd)/management:${LOCAL_MODS_DIR:-$(pwd)/local}
+export PYTHONPATH=$(pwd)/management
 exec gunicorn --log-level ${MGMT_LOG_LEVEL:-info} -b localhost:10222 -w 1 --timeout 630 wsgi:app
 EOF
 chmod +x $inst_dir/start
diff --git a/setup/start.sh b/setup/start.sh
index 50eed4a0..2547ce3b 100755
--- a/setup/start.sh
+++ b/setup/start.sh
@@ -105,6 +105,9 @@ if [ ! -f $STORAGE_ROOT/mailinabox-ldap.version ]; then
 	chown $STORAGE_USER.$STORAGE_USER $STORAGE_ROOT/mailinabox-ldap.version
 fi
 
+# normalize the directory path for setup mods
+LOCAL_MODS_DIR="$(realpath -m "${LOCAL_MODS_DIR:-${DEFAULT_LOCAL_MODS_DIR:-local}}")"
+
 # Save the global options in /etc/mailinabox.conf so that standalone
 # tools know where to look for data. The default MTA_STS_MODE setting
 # is blank unless set by an environment variable, but see web.sh for
@@ -118,6 +121,7 @@ PUBLIC_IPV6=$PUBLIC_IPV6
 PRIVATE_IP=$PRIVATE_IP
 PRIVATE_IPV6=$PRIVATE_IPV6
 MTA_STS_MODE=${DEFAULT_MTA_STS_MODE:-enforce}
+LOCAL_MODS_DIR=$LOCAL_MODS_DIR
 EOF
 
 # Start service configuration.
@@ -139,11 +143,7 @@ source setup/management-capture.sh
 source setup/munin.sh
 
 # Wait for the management daemon to start...
-until nc -z -w 4 127.0.0.1 10222
-do
-	echo Waiting for the Mail-in-a-Box management daemon to start...
-	sleep 2
-done
+wait_for_management_daemon progress forever
 
 # ...and then have it write the DNS and nginx configuration files and start those
 # services.
@@ -174,9 +174,9 @@ fi
 #
 # Run setup mods 
 #
-if [ -d "${LOCAL_MODS_DIR:-local}" ]; then
-    for mod in $(ls "${LOCAL_MODS_DIR:-local}" | grep -v '~$'); do
-        mod_path="${LOCAL_MODS_DIR:-local}/$mod"
+if [ -d "$LOCAL_MODS_DIR" ]; then
+    for mod in $(ls "$LOCAL_MODS_DIR" | grep -v '~$'); do
+        mod_path="$LOCAL_MODS_DIR/$mod"
         if [ -f "$mod_path" -a -x "$mod_path" ]; then
             echo ""
             echo "Running mod: $mod_path"