diff --git a/api/v1beta1/conditions_const.go b/api/v1beta1/conditions_const.go
index ff7f9e3bd..3d2844aa9 100644
--- a/api/v1beta1/conditions_const.go
+++ b/api/v1beta1/conditions_const.go
@@ -44,14 +44,10 @@ const (
 	ImageNotFoundReason = "ImageNotFound"
 	// ImageAmbiguousReason indicates that there are multiple images with the required properties.
 	ImageAmbiguousReason = "ImageAmbiguous"
-	// ServerLimitExceededReason indicates that server resource rate limit is hit.
-	ServerLimitExceededReason = "ServerLimitExceeded"
 	// ServerTypeNotFoundReason indicates that server type could not be found.
 	ServerTypeNotFoundReason = "ServerTypeNotFound"
-	// ServerResourceUnavailableReason indicates that server resource is unavailable.
-	ServerResourceUnavailableReason = "ServerResourceUnavailable"
-	// ServerPlacementErrorReason indicates placement error while creating server.
-	ServerPlacementErrorReason = "ServerPlacementError"
+	// ServerCreateFailedReason indicates that server could not get created.
+	ServerCreateFailedReason = "ServerCreateFailedReason"
 )
 
 const (
diff --git a/controllers/hetznerbaremetalremediation_controller_test.go b/controllers/hetznerbaremetalremediation_controller_test.go
index d7599c0fc..e4364119e 100644
--- a/controllers/hetznerbaremetalremediation_controller_test.go
+++ b/controllers/hetznerbaremetalremediation_controller_test.go
@@ -257,7 +257,7 @@ var _ = Describe("HetznerBareMetalRemediationReconciler", func() {
 					Expect(testEnv.Cleanup(ctx, hetznerBareMetalRemediation, hetznerBaremetalMachine)).To(Succeed())
 				})
 
-				It("should not remediate if no annotations is present in the hetznerBaremetalMachine", func() {
+				It("should not remediate if no annotations is present in the hetznerBaremetalMachine (flaky)", func() {
 					Expect(testEnv.Create(ctx, hetznerBaremetalMachine)).To(Succeed())
 					Expect(testEnv.Create(ctx, hetznerBareMetalRemediation)).To(Succeed())
 
diff --git a/pkg/services/hcloud/server/server.go b/pkg/services/hcloud/server/server.go
index 10cf0aad2..2fdfef305 100644
--- a/pkg/services/hcloud/server/server.go
+++ b/pkg/services/hcloud/server/server.go
@@ -450,49 +450,25 @@ func (s *Service) createServer(ctx context.Context) (*hcloud.Server, error) {
 	// Create the server
 	server, err := s.scope.HCloudClient.CreateServer(ctx, opts)
 	if err != nil {
-		hcloudutil.HandleRateLimitExceeded(s.scope.HCloudMachine, err, "CreateServer")
-		if hcloud.IsError(err, hcloud.ErrorCodeResourceLimitExceeded) {
-			conditions.MarkFalse(
-				s.scope.HCloudMachine,
-				infrav1.ServerCreateSucceededCondition,
-				infrav1.ServerLimitExceededReason,
-				clusterv1.ConditionSeverityError,
-				err.Error(),
-			)
-
-			err = errors.Join(errServerCreateNotPossible, err)
-		}
-
-		if hcloud.IsError(err, hcloud.ErrorCodeResourceUnavailable) {
-			conditions.MarkFalse(
-				s.scope.HCloudMachine,
-				infrav1.ServerCreateSucceededCondition,
-				infrav1.ServerResourceUnavailableReason,
-				clusterv1.ConditionSeverityWarning,
-				err.Error(),
-			)
-
-			err = errors.Join(errServerCreateNotPossible, err)
-		}
-
-		if hcloud.IsError(err, hcloud.ErrorCodePlacementError) {
-			conditions.MarkFalse(
-				s.scope.HCloudMachine,
-				infrav1.ServerCreateSucceededCondition,
-				infrav1.ServerPlacementErrorReason,
-				clusterv1.ConditionSeverityWarning,
-				err.Error(),
-			)
-
-			err = errors.Join(errServerCreateNotPossible, err)
+		if hcloudutil.HandleRateLimitExceeded(s.scope.HCloudMachine, err, "CreateServer") {
+			// RateLimit was reached. Condition and Event got already created.
+			return nil, fmt.Errorf("failed to create HCloud server %s: %w", s.scope.HCloudMachine.Name, err)
 		}
-
+		// No condition was set yet. Set a general condition to false.
+		conditions.MarkFalse(
+			s.scope.HCloudMachine,
+			infrav1.ServerCreateSucceededCondition,
+			infrav1.ServerCreateFailedReason,
+			clusterv1.ConditionSeverityWarning,
+			err.Error(),
+		)
 		record.Warnf(s.scope.HCloudMachine,
 			"FailedCreateHCloudServer",
 			"Failed to create HCloud server %s: %s",
 			s.scope.Name(),
 			err,
 		)
+		err = errors.Join(errServerCreateNotPossible, err)
 		return nil, fmt.Errorf("failed to create HCloud server %s: %w", s.scope.HCloudMachine.Name, err)
 	}
 
diff --git a/pkg/services/hcloud/util/utils.go b/pkg/services/hcloud/util/utils.go
index a1e3646f5..6310b8707 100644
--- a/pkg/services/hcloud/util/utils.go
+++ b/pkg/services/hcloud/util/utils.go
@@ -69,7 +69,8 @@ type runtimeObjectWithConditions interface {
 }
 
 // HandleRateLimitExceeded handles rate limit exceeded errors.
-func HandleRateLimitExceeded(obj runtimeObjectWithConditions, err error, functionName string) {
+// Returns true if RateLimit is reached.
+func HandleRateLimitExceeded(obj runtimeObjectWithConditions, err error, functionName string) bool {
 	if hcloud.IsError(err, hcloud.ErrorCodeRateLimitExceeded) {
 		msg := fmt.Sprintf("exceeded hcloud rate limit with calling function %q", functionName)
 		conditions.MarkFalse(
@@ -80,5 +81,7 @@ func HandleRateLimitExceeded(obj runtimeObjectWithConditions, err error, functio
 			msg,
 		)
 		record.Warnf(obj, "RateLimitExceeded", msg)
+		return true
 	}
+	return false
 }