diff --git a/NEWS b/NEWS
--- a/NEWS
+++ b/NEWS
@@ -1,4 +1,7 @@
-* 0.8.5 (2013-09-28)
+* 0.8.6 (2013-10-04)
+- check for _darcs or .git dir in package topdir not pwd
+
+* 0.8.5 (2013-09-29)
 - fix repoquery when a package update exists for C lib
 - make cblrpm-diff quieter
 
diff --git a/cabal-rpm.cabal b/cabal-rpm.cabal
--- a/cabal-rpm.cabal
+++ b/cabal-rpm.cabal
@@ -1,10 +1,12 @@
 Name:                cabal-rpm
-Version:             0.8.5
+Version:             0.8.6
 Synopsis:            RPM package creator for Haskell Cabal-based packages
 Description:
     This package generates RPM packages from Haskell Cabal packages.
     .
     Recent changes:
+    .
+    * 0.8.6: check for _darcs or .git dir in package topdir not pwd
     .
     * 0.8.5: fix repoquery when a package update exists for C lib; make cblrpm-diff quieter
     .
diff --git a/src/Commands/Build.hs b/src/Commands/Build.hs
--- a/src/Commands/Build.hs
+++ b/src/Commands/Build.hs
@@ -35,7 +35,7 @@
 import System.Directory (copyFile, doesFileExist, doesDirectoryExist,
                          getCurrentDirectory)
 import System.Environment (getEnv)
-import System.FilePath.Posix ((</>))
+import System.FilePath.Posix (takeDirectory, (</>))
 
 -- autoreconf :: Verbosity -> PackageDescription -> IO ()
 -- autoreconf verbose pkgDesc = do
@@ -75,9 +75,10 @@
         rpmCmd = if binary then "a" else "s"
     tarFileExists <- doesFileExist tarFile
     unless tarFileExists $ do
-      darcsRepo <- doesDirectoryExist "_darcs"
+      let pkgDir = takeDirectory cabalPath
+      darcsRepo <- doesDirectoryExist $ pkgDir </> "_darcs"
       unless darcsRepo $ do
-        gitRepo <- doesDirectoryExist ".git"
+        gitRepo <- doesDirectoryExist $ pkgDir </> ".git"
         unless (darcsRepo || gitRepo) $ do
           trySystem ("cabal fetch -v0 --no-dependencies" +-+ name ++ "-" ++ version)
           copyFile (cachedir </> tarFile) (cwd </> tarFile)
diff --git a/src/Commands/Spec.hs b/src/Commands/Spec.hs
--- a/src/Commands/Spec.hs
+++ b/src/Commands/Spec.hs
@@ -49,15 +49,17 @@
                          getDirectoryContents)
 import System.IO     (IOMode (..), hClose, hPutStrLn, openFile)
 import System.Locale (defaultTimeLocale)
-import System.FilePath (dropFileName)
+import System.FilePath (dropFileName, takeDirectory, (</>))
 
 import qualified Paths_cabal_rpm (version)
 
 
-defaultRelease :: UTCTime -> IO String
-defaultRelease now = do
-    darcsRepo <- doesDirectoryExist "_darcs"
-    return $ if darcsRepo
+defaultRelease :: FilePath -> UTCTime -> IO String
+defaultRelease cabalPath now = do
+    let pkgDir = takeDirectory cabalPath
+    darcsRepo <- doesDirectoryExist $ pkgDir </> "_darcs"
+    gitRepo <- doesDirectoryExist $ pkgDir </> ".git"
+    return $ if (darcsRepo || gitRepo)
                then formatTime defaultTimeLocale "0.%Y%m%d" now
                else "1"
 
@@ -78,7 +80,7 @@
 createSpecFile cabalPath genPkgDesc flags = do
     let verbose = rpmVerbosity flags
     now <- getCurrentTime
-    defRelease <- defaultRelease now
+    defRelease <- defaultRelease cabalPath now
     pkgDesc <- simplePackageDescription genPkgDesc flags
     let pkg = package pkgDesc
         name = packageName pkg