diff --git a/lib/schema.js b/lib/schema.js
index 4a14d602..e3390dc5 100644
--- a/lib/schema.js
+++ b/lib/schema.js
@@ -125,6 +125,10 @@ var processFurther = Promise.method(function(val, key, $id){
               }
             });
           });
+        } else {
+          //type is object but property does not contain a $ref
+          // go recursively down to check for a $ref
+          return processFurther(propertyValue, propertyKey, base$id);
         }
       });