diff --git a/subsys/net/lib/lwm2m/lwm2m_engine.c b/subsys/net/lib/lwm2m/lwm2m_engine.c
index e293ddfc429..926025c0ed8 100644
--- a/subsys/net/lib/lwm2m/lwm2m_engine.c
+++ b/subsys/net/lib/lwm2m/lwm2m_engine.c
@@ -5591,8 +5591,9 @@ int lwm2m_socket_start(struct lwm2m_ctx *client_ctx)
 {
 	socklen_t addr_len;
 	int flags;
-#if defined(CONFIG_LWM2M_DTLS_SUPPORT)
 	int ret;
+
+#if defined(CONFIG_LWM2M_DTLS_SUPPORT)
 	uint8_t tmp;
 
 	if (client_ctx->load_credentials) {
@@ -5636,10 +5637,9 @@ int lwm2m_socket_start(struct lwm2m_ctx *client_ctx)
 		ret = setsockopt(client_ctx->sock_fd, SOL_TLS, TLS_SEC_TAG_LIST,
 				 tls_tag_list, sizeof(tls_tag_list));
 		if (ret < 0) {
-			LOG_ERR("Failed to set TLS_SEC_TAG_LIST option: %d",
-				errno);
-			lwm2m_engine_context_close(client_ctx);
-			return -errno;
+			ret = -errno;
+			LOG_ERR("Failed to set TLS_SEC_TAG_LIST option: %d", ret);
+			goto error;
 		}
 
 		if (client_ctx->hostname_verify && (client_ctx->desthostname != NULL)) {
@@ -5656,9 +5656,9 @@ int lwm2m_socket_start(struct lwm2m_ctx *client_ctx)
 			/** restore character */
 			client_ctx->desthostname[client_ctx->desthostnamelen] = tmp;
 			if (ret < 0) {
-				LOG_ERR("Failed to set TLS_HOSTNAME option: %d", errno);
-				lwm2m_engine_context_close(client_ctx);
-				return -errno;
+				ret = -errno;
+				LOG_ERR("Failed to set TLS_HOSTNAME option: %d", ret);
+				goto error;
 			}
 		}
 	}
@@ -5674,18 +5674,31 @@ int lwm2m_socket_start(struct lwm2m_ctx *client_ctx)
 
 	if (connect(client_ctx->sock_fd, &client_ctx->remote_addr,
 		    addr_len) < 0) {
-		LOG_ERR("Cannot connect UDP (-%d)", errno);
-		lwm2m_engine_context_close(client_ctx);
-		return -errno;
+		ret = -errno;
+		LOG_ERR("Cannot connect UDP (%d)", ret);
+		goto error;
 	}
 
 	flags = fcntl(client_ctx->sock_fd, F_GETFL, 0);
 	if (flags == -1) {
-		return -errno;
+		ret = -errno;
+		LOG_ERR("fcntl(F_GETFL) failed (%d)", ret);
+		goto error;
 	}
-	fcntl(client_ctx->sock_fd, F_SETFL, flags | O_NONBLOCK);
+	ret = fcntl(client_ctx->sock_fd, F_SETFL, flags | O_NONBLOCK);
+	if (ret == -1) {
+		ret = -errno;
+		LOG_ERR("fcntl(F_SETFL) failed (%d)", ret);
+		goto error;
+	}
+
+	LOG_INF("Connected, sock id %d", client_ctx->sock_fd);
 
 	return lwm2m_socket_add(client_ctx);
+
+error:
+	lwm2m_engine_context_close(client_ctx);
+	return ret;
 }
 
 int lwm2m_parse_peerinfo(char *url, struct lwm2m_ctx *client_ctx, bool is_firmware_uri)
diff --git a/subsys/net/lib/lwm2m/lwm2m_rd_client.c b/subsys/net/lib/lwm2m/lwm2m_rd_client.c
index 1c42bdf7e9f..5a14c1be866 100644
--- a/subsys/net/lib/lwm2m/lwm2m_rd_client.c
+++ b/subsys/net/lib/lwm2m/lwm2m_rd_client.c
@@ -155,8 +155,10 @@ static void set_sm_state(uint8_t sm_state)
 		    sm_state == ENGINE_DEREGISTERED) &&
 		   (client.engine_state >= ENGINE_DO_REGISTRATION &&
 		    client.engine_state <= ENGINE_DEREGISTER_SENT)) {
+		lwm2m_engine_context_close(client.ctx);
 		event = LWM2M_RD_CLIENT_EVENT_DISCONNECT;
 	} else if (sm_state == ENGINE_NETWORK_ERROR) {
+		lwm2m_engine_context_close(client.ctx);
 		client.retry_delay = 1 << client.retries;
 		client.retries++;
 		if (client.retries > CONFIG_LWM2M_RD_CLIENT_MAX_RETRIES) {
@@ -231,6 +233,7 @@ static void sm_handle_failure_state(enum sm_engine_state sm_state)
 		event = LWM2M_RD_CLIENT_EVENT_DEREGISTER_FAILURE;
 	}
 
+	lwm2m_engine_context_close(client.ctx);
 	set_sm_state(sm_state);
 
 	if (event > LWM2M_RD_CLIENT_EVENT_NONE && client.event_cb) {
@@ -456,7 +459,6 @@ static int do_deregister_reply_cb(const struct coap_packet *response,
 
 	if (code == COAP_RESPONSE_CODE_DELETED) {
 		LOG_INF("Deregistration success");
-		lwm2m_engine_context_close(client.ctx);
 		set_sm_state(ENGINE_DEREGISTERED);
 		return 0;
 	}
@@ -678,7 +680,6 @@ static int sm_do_bootstrap_reg(void)
 		set_sm_state(ENGINE_BOOTSTRAP_REG_SENT);
 	} else {
 		LOG_ERR("Bootstrap registration err: %d", ret);
-		lwm2m_engine_context_close(client.ctx);
 		set_sm_state(ENGINE_NETWORK_ERROR);
 	}
 
@@ -896,7 +897,6 @@ static int sm_do_registration(void)
 		set_sm_state(ENGINE_REGISTRATION_SENT);
 	} else {
 		LOG_ERR("Registration err: %d", ret);
-		lwm2m_engine_context_close(client.ctx);
 		set_sm_state(ENGINE_NETWORK_ERROR);
 	}
 
@@ -951,7 +951,8 @@ static int sm_do_deregister(void)
 	msg = lwm2m_get_message(client.ctx);
 	if (!msg) {
 		LOG_ERR("Unable to get a lwm2m message!");
-		return -ENOMEM;
+		ret = -ENOMEM;
+		goto close_ctx;
 	}
 
 	msg->type = COAP_TYPE_CON;
@@ -992,7 +993,9 @@ static int sm_do_deregister(void)
 
 cleanup:
 	lwm2m_reset_message(msg, true);
+close_ctx:
 	lwm2m_engine_context_close(client.ctx);
+	set_sm_state(ENGINE_DEREGISTERED);
 	return ret;
 }
 
@@ -1129,12 +1132,16 @@ void lwm2m_rd_client_stop(struct lwm2m_ctx *client_ctx,
 	if (sm_is_registered() && deregister) {
 		set_sm_state(ENGINE_DEREGISTER);
 	} else {
-		set_sm_state(ENGINE_IDLE);
+		set_sm_state(ENGINE_DEREGISTERED);
 	}
 
 	LOG_INF("Stop LWM2M Client: %s", log_strdup(client.ep_name));
 
 	k_mutex_unlock(&client.mutex);
+
+	while (get_sm_state() != ENGINE_IDLE) {
+		k_sleep(K_MSEC(STATE_MACHINE_UPDATE_INTERVAL_MS / 2));
+	}
 }
 
 void lwm2m_rd_client_update(void)