--- muc.lib.lua	2016-10-26 18:26:53.432377291 +0000
+++ muc.lib.lua	2016-10-26 18:41:40.754426072 +0000
@@ -1582,16 +1582,16 @@
 	if event.allowed ~= nil then
 		return event.allowed, event.error, event.condition;
 	end
+	local occupant_affiliation = self:get_affiliation(occupant.bare_jid);
 
 	-- Can't do anything to other owners or admins
-	local occupant_affiliation = self:get_affiliation(occupant.bare_jid);
-	if occupant_affiliation == "owner" or occupant_affiliation == "admin" then
+	local actor_affiliation = self:get_affiliation(actor);
+	if (occupant_affiliation == "owner" and actor_affiliation ~= "owner") or (occupant_affiliation == "admin" and actor_affiliation ~= "admin" and actor_affiliation ~= "owner") then
 		return nil, "cancel", "not-allowed";
 	end
 
 	-- If you are trying to give or take moderator role you need to be an owner or admin
 	if occupant.role == "moderator" or role == "moderator" then
-		local actor_affiliation = self:get_affiliation(actor);
 		if actor_affiliation ~= "owner" and actor_affiliation ~= "admin" then
 			return nil, "cancel", "not-allowed";
 		end