diff --git a/overlay/files/system/oem/11_persistency.yaml b/overlay/files/system/oem/11_persistency.yaml
index b5d8a0580..9623fe991 100644
--- a/overlay/files/system/oem/11_persistency.yaml
+++ b/overlay/files/system/oem/11_persistency.yaml
@@ -36,21 +36,22 @@ stages:
           /usr/share/pki/trust/anchors
           /var/lib/ca-certificates
         PERSISTENT_STATE_BIND: "true"
-    - if: |
-        [ -r /run/cos/custom-layout.env ]
-      name: "append custom bind and ephemeral mounts to /run/cos/cos-layout.env"
+    - if: '[ -r /run/cos/custom-layout.env ] && [ ! -f "/run/cos/recovery_mode" ] && [ ! -f /run/cos/live_mode ]'
+      name: "add custom bind and ephemeral mounts to /run/cos/cos-layout.env"
       commands:
         - |
-             source /run/cos/cos-layout.env
-             source /run/cos/custom-layout.env
-             PERSISTENT_STATE_PATHS="${CUSTOM_EPHEMERAL_MOUNTS} ${PERSISTENT_STATE_PATHS}"
-             RW_PATHS="${CUSTOM_BIND_MOUNTS} ${RW_PATHS}"
-             echo CUSTOM_BIND_MOUNTS=\"${CUSTOM_BIND_MOUNTS}\" >> /run/cos/cos-layout.env
-             echo CUSTOM_EPHEMERAL_MOUNTS=\"${CUSTOM_EPHEMERAL_MOUNTS}\" >> /run/cos/cos-layout.env
-             echo "# rw paths with user bind mounts" >> /run/cos/cos-layout.env
-             echo RW_PATHS=\"${RW_PATHS}\" >> /run/cos/cos-layout.env
-             echo "# persistent state paths with user ephemeral mounts" >> /run/cos/cos-layout.env
-             echo PERSISTENT_STATE_PATHS=\"${PERSISTENT_STATE_PATHS}\" >> /run/cos/cos-layout.env
+            source /run/cos/cos-layout.env
+            source /run/cos/custom-layout.env
+            PERSISTENT_STATE_PATHS="${CUSTOM_BIND_MOUNTS} ${PERSISTENT_STATE_PATHS}"
+            RW_PATHS="${CUSTOM_EPHEMERAL_MOUNTS} ${RW_PATHS}"
+            # Remove the existing lines that we are gonna rewrite
+            sed -i "/RW_PATHS/d" /run/cos/cos-layout.env
+            sed -i "/PERSISTENT_STATE_PATHS/d" /run/cos/cos-layout.env
+            # Add the new lines
+            echo "# rw paths with user bind mounts" >> /run/cos/cos-layout.env
+            echo RW_PATHS=\"${RW_PATHS}\" >> /run/cos/cos-layout.env
+            echo "# persistent state paths with user ephemeral mounts" >> /run/cos/cos-layout.env
+            echo PERSISTENT_STATE_PATHS=\"${PERSISTENT_STATE_PATHS}\" >> /run/cos/cos-layout.env
     - if: |
         cat /proc/cmdline | grep -q "kairos.boot_live_mode"
       name: "Layout configuration"
diff --git a/tests/install_test.go b/tests/install_test.go
index 4fd620a38..e89c696ed 100644
--- a/tests/install_test.go
+++ b/tests/install_test.go
@@ -93,11 +93,11 @@ bundles:
 			Eventually(func() string {
 				out, _ := Sudo("cat /run/cos/cos-layout.env")
 				return out
-			}, 5*time.Minute, 10*time.Second).Should(ContainSubstring("CUSTOM_BIND_MOUNTS=\"/mnt/bind1 /mnt/bind2\""))
+			}, 5*time.Minute, 10*time.Second).Should(ContainSubstring("PERSISTENT_STATE_PATHS=\"/mnt/bind1 /mnt/bind2"))
 			Eventually(func() string {
 				out, _ := Sudo("cat /run/cos/cos-layout.env")
 				return out
-			}, 5*time.Minute, 10*time.Second).Should(ContainSubstring("CUSTOM_EPHEMERAL_MOUNTS=\"/mnt/ephemeral /mnt/ephemeral2\""))
+			}, 5*time.Minute, 10*time.Second).Should(ContainSubstring("RW_PATHS=\"/mnt/ephemeral /mnt/ephemeral2"))
 
 			Eventually(func() string {
 				out, _ := Sudo("/usr/local/bin/usr/bin/edgevpn --help | grep peer")