diff --git a/pkg/copytool/copytool.go b/pkg/copytool/copytool.go
index 3f36b8c4..dba4b171 100644
--- a/pkg/copytool/copytool.go
+++ b/pkg/copytool/copytool.go
@@ -62,23 +62,28 @@ func New(ctx context.Context, backend string, paths []string, opts *Options) (Co
 		if err != nil {
 			return nil, err
 		}
-
+		// Report a bad path as itself; IsAvailableOnGuest would reduce it to
+		// "rsync not available on guest(s)".
+		if _, err := parseCopyPaths(ctx, paths); err != nil {
+			return nil, err
+		}
 		if !rsync.IsAvailableOnGuest(ctx, paths) {
 			return nil, errors.New("rsync not available on guest(s)")
 		}
 		return rsync, nil
 	case BackendAuto:
-		var (
-			tool CopyTool
-			err  error
-		)
-
 		// For rsync, the source and destination cannot both be remote
-		if !hasRemoteSourceAndDestination(ctx, paths) {
-			tool, err = newRsyncTool(opts)
+		bothRemote, err := hasRemoteSourceAndDestination(ctx, paths)
+		if err != nil {
+			// A bad path is fatal for every backend, so report it here. Falling
+			// through to scp would replace it with "scp not found on host".
+			return nil, err
+		}
+		if !bothRemote {
+			rsync, err := newRsyncTool(opts)
 			if err == nil {
-				if tool.IsAvailableOnGuest(ctx, paths) {
-					return tool, nil
+				if rsync.IsAvailableOnGuest(ctx, paths) {
+					return rsync, nil
 				}
 				logrus.Debugf("rsync not available on guest(s), falling back to scp")
 			} else {
@@ -86,9 +91,11 @@ func New(ctx context.Context, backend string, paths []string, opts *Options) (Co
 			}
 		}
 
-		tool, err = newSCPTool(opts)
+		tool, err := newSCPTool(opts)
 		if err != nil {
-			return nil, fmt.Errorf("neither rsync nor scp found on host: %w", err)
+			// rsync may well have been found and rejected above, so name the
+			// outcome rather than guessing which tool is missing.
+			return nil, fmt.Errorf("no usable copy tool on host: %w", err)
 		}
 		return tool, nil
 	default:
@@ -96,10 +103,10 @@ func New(ctx context.Context, backend string, paths []string, opts *Options) (Co
 	}
 }
 
-func hasRemoteSourceAndDestination(ctx context.Context, paths []string) bool {
+func hasRemoteSourceAndDestination(ctx context.Context, paths []string) (bool, error) {
 	copyPaths, err := parseCopyPaths(ctx, paths)
 	if err != nil {
-		return true
+		return false, err
 	}
 
 	var hasRemoteSource, hasRemoteDestination bool
@@ -113,7 +120,7 @@ func hasRemoteSourceAndDestination(ctx context.Context, paths []string) bool {
 		}
 	}
 
-	return hasRemoteSource && hasRemoteDestination
+	return hasRemoteSource && hasRemoteDestination, nil
 }
 
 func parseCopyPaths(ctx context.Context, paths []string) ([]*Path, error) {
diff --git a/pkg/copytool/copytool_test.go b/pkg/copytool/copytool_test.go
index d098e4fa..8010906f 100644
--- a/pkg/copytool/copytool_test.go
+++ b/pkg/copytool/copytool_test.go
@@ -184,3 +184,13 @@ func TestQuoteRemotePath(t *testing.T) {
 		assert.Equal(t, quoteRemotePath(tt.path), tt.expected, "path=%q", tt.path)
 	}
 }
+
+// TestNewAutoSurfacesPathError verifies that the default backend reports a bad
+// path as itself, rather than as a missing copy tool.
+func TestNewAutoSurfacesPathError(t *testing.T) {
+	t.Setenv("LIMA_HOME", t.TempDir())
+	paths := []string{"nonexistent-instance-for-test:/tmp/x", "/tmp/y"}
+
+	_, err := New(t.Context(), string(BackendAuto), paths, &Options{})
+	assert.ErrorContains(t, err, "instance `nonexistent-instance-for-test` does not exist")
+}
diff --git a/pkg/copytool/rsync.go b/pkg/copytool/rsync.go
index 19d731cf..a73680ec 100644
--- a/pkg/copytool/rsync.go
+++ b/pkg/copytool/rsync.go
@@ -39,6 +39,7 @@ func (t *rsyncTool) Name() string {
 func (t *rsyncTool) IsAvailableOnGuest(ctx context.Context, paths []string) bool {
 	copyPaths, err := parseCopyPaths(ctx, paths)
 	if err != nil {
+		// New() has already reported this to the user.
 		logrus.Debugf("failed to parse copy paths for rsync availability check: %v", err)
 		return false
 	}