diff --git a/lib/model.js b/lib/model.js
index 0d8ca70a..0bda2ab7 100644
--- a/lib/model.js
+++ b/lib/model.js
@@ -208,6 +208,7 @@ ModelBaseClass.prototype._initProperties = function (data, options) {
   for (k = 0; k < size; k++) {
     p = keys[k];
     propVal = self.__data[p];
+    var type = properties[p].type;
 
     // Set default values
     if (propVal === undefined) {
@@ -222,6 +223,8 @@ ModelBaseClass.prototype._initProperties = function (data, options) {
           } else {
             def = def();
           }
+        } else if (type.name === 'Date' && def === '$now') {
+          def = new Date();
         }
         // FIXME: We should coerce the value
         // will implement it after we refactor the PropertyDefinition
@@ -230,7 +233,6 @@ ModelBaseClass.prototype._initProperties = function (data, options) {
     }
 
     // Handle complex types (JSON/Object)
-    var type = properties[p].type;
     if (!BASE_TYPES[type.name]) {
 
       if (typeof self.__data[p] !== 'object' && self.__data[p]) {
diff --git a/test/manipulation.test.js b/test/manipulation.test.js
index b5af2d11..03a42d41 100644
--- a/test/manipulation.test.js
+++ b/test/manipulation.test.js
@@ -442,6 +442,35 @@ describe('manipulation', function () {
       person.isNewRecord().should.be.true;
     });
 
+    it('should report current date when using $now as default value for date property',
+      function (done) {
+        var CustomModel = db.define('CustomModel', {
+          createdAt: { type: Date, default: '$now' }
+        });
+
+        var now = Date.now();
+
+        var myCustomModel = CustomModel.create(function (err, m) {
+           m.createdAt.should.be.instanceOf(Date);
+           (m.createdAt >= now).should.be.true;
+        });
+
+        done();
+    });
+
+    it('should report \'$now\' when using $now as default value for string property',
+      function (done) {
+        var CustomModel = db.define('CustomModel', {
+          now: { type: String, default: '$now' }
+        });
+
+        var myCustomModel = CustomModel.create(function (err, m) {
+          m.now.should.be.instanceOf(String);
+          m.now.should.equal('$now');
+        });
+
+        done();
+    });
     // it('should work when constructor called as function', function() {
     //     var p = Person({name: 'John Resig'});
     //     p.should.be.an.instanceOf(Person);