diff --git a/pype/settings/entities/base_entity.py b/pype/settings/entities/base_entity.py
index 95767f464f..c231c8e41e 100644
--- a/pype/settings/entities/base_entity.py
+++ b/pype/settings/entities/base_entity.py
@@ -154,7 +154,6 @@ class BaseEntity:
     def get_child_path(self, child_obj):
         pass
 
-
     @abstractmethod
     def schema_validations(self):
         pass
@@ -671,6 +670,7 @@ class SystemRootEntity(RootEntity):
             value = default_value.get(key, NOT_SET)
             child_obj.update_default_value(value)
 
+        studio_overrides = {}
         studio_overrides = get_studio_system_settings_overrides()
         for key, child_obj in self.non_gui_children.items():
             value = studio_overrides.get(key, NOT_SET)
diff --git a/pype/settings/entities/input_entities.py b/pype/settings/entities/input_entities.py
index d694918282..5ad444430a 100644
--- a/pype/settings/entities/input_entities.py
+++ b/pype/settings/entities/input_entities.py
@@ -182,11 +182,10 @@ class InputEntity(ItemEntity):
 
     def set_override_state(self, state):
         self.override_state = state
-        if (
-            not self.has_default_value
-            and state in (OverrideState.STUDIO, OverrideState.PROJECT)
-        ):
-            raise DefaultsNotDefined(self)
+        if not self.has_default_value and state > OverrideState.DEFAULTS:
+            # Ignore if is dynamic item and use default in that case
+            if not self.is_dynamic_item and not self.is_in_dynamic_item:
+                raise DefaultsNotDefined(self)
 
         if state is OverrideState.STUDIO:
             self._has_studio_override = (
@@ -431,11 +430,10 @@ class RawJsonEntity(InputEntity):
 
     def set_override_state(self, state):
         self.override_state = state
-        if (
-            not self.has_default_value
-            and state in (OverrideState.STUDIO, OverrideState.PROJECT)
-        ):
-            raise DefaultsNotDefined(self)
+        if not self.has_default_value and state > OverrideState.DEFAULTS:
+            # Ignore if is dynamic item and use default in that case
+            if not self.is_dynamic_item and not self.is_in_dynamic_item:
+                raise DefaultsNotDefined(self)
 
         if state is OverrideState.STUDIO:
             self._has_studio_override = (
diff --git a/pype/settings/entities/item_entities.py b/pype/settings/entities/item_entities.py
index 3144562e55..5f92135499 100644
--- a/pype/settings/entities/item_entities.py
+++ b/pype/settings/entities/item_entities.py
@@ -440,11 +440,10 @@ class DictMutableKeysEntity(ItemEntity):
     def set_override_state(self, state):
         # TODO change metadata
         self.override_state = state
-        if (
-            not self.has_default_value
-            and state in (OverrideState.STUDIO, OverrideState.PROJECT)
-        ):
-            raise DefaultsNotDefined(self)
+        if not self.has_default_value and state > OverrideState.DEFAULTS:
+            # Ignore if is dynamic item and use default in that case
+            if not self.is_dynamic_item and not self.is_in_dynamic_item:
+                raise DefaultsNotDefined(self)
 
         using_overrides = True
         if (
@@ -800,11 +799,10 @@ class ListStrictEntity(ItemEntity):
     def set_override_state(self, state):
         # TODO use right value as current_value is held here
         self.override_state = state
-        if (
-            not self.has_default_value
-            and state in (OverrideState.STUDIO, OverrideState.PROJECT)
-        ):
-            raise DefaultsNotDefined(self)
+        if not self.has_default_value and state > OverrideState.DEFAULTS:
+            # Ignore if is dynamic item and use default in that case
+            if not self.is_dynamic_item and not self.is_in_dynamic_item:
+                raise DefaultsNotDefined(self)
 
         for child_obj in self.children:
             child_obj.set_override_state(state)
diff --git a/pype/settings/entities/list_entity.py b/pype/settings/entities/list_entity.py
index 7c9af78876..f1ac2983cb 100644
--- a/pype/settings/entities/list_entity.py
+++ b/pype/settings/entities/list_entity.py
@@ -134,7 +134,9 @@ class ListEntity(ItemEntity):
             self.children.pop(0)
 
         if not self.has_default_value and state > OverrideState.DEFAULTS:
-            raise DefaultsNotDefined(self)
+            # Ignore if is dynamic item and use default in that case
+            if not self.is_dynamic_item and not self.is_in_dynamic_item:
+                raise DefaultsNotDefined(self)
 
         value = NOT_SET
         if self.override_state is OverrideState.PROJECT: