diff --git a/dvc/dependency/repo.py b/dvc/dependency/repo.py
index 8566c080b9..058c9e3938 100644
--- a/dvc/dependency/repo.py
+++ b/dvc/dependency/repo.py
@@ -47,7 +47,9 @@ def _make_repo(self, *, locked=True):
 
         d = self.def_repo
         rev = (d.get("rev_lock") if locked else None) or d.get("rev")
-        return external_repo(d["url"], rev=rev)
+        return external_repo(
+            d["url"], path=os.path.dirname(self.def_path), rev=rev
+        )
 
     def _get_checksum(self, locked=True):
         from dvc.repo.tree import RepoTree
@@ -56,7 +58,7 @@ def _get_checksum(self, locked=True):
             try:
                 return repo.find_out_by_relpath(self.def_path).info["md5"]
             except OutputNotFoundError:
-                path = PathInfo(os.path.join(repo.root_dir, self.def_path))
+                path = PathInfo(os.path.join(repo.scm.root_dir, self.def_path))
 
                 # we want stream but not fetch, so DVC out directories are
                 # walked, but dir contents is not fetched
diff --git a/dvc/external_repo.py b/dvc/external_repo.py
index 5f22321473..93bf8fe89a 100644
--- a/dvc/external_repo.py
+++ b/dvc/external_repo.py
@@ -27,15 +27,22 @@
 
 
 @contextmanager
-def external_repo(url, rev=None, for_write=False):
+def external_repo(url, rev=None, path=None, for_write=False):
     logger.debug("Creating external repo %s@%s", url, rev)
-    path = _cached_clone(url, rev, for_write=for_write)
+    cloned_path = _cached_clone(url, rev, for_write=for_write)
+    # DVCRepo can find the path recursively
+    path = (
+        os.path.join(cloned_path, path)
+        if path and not os.path.isabs(path)
+        else cloned_path
+    )
+
     if not rev:
         rev = "HEAD"
     try:
-        repo = ExternalRepo(path, url, rev, for_write=for_write)
+        repo = ExternalRepo(cloned_path, path, url, rev, for_write=for_write)
     except NotDvcRepoError:
-        repo = ExternalGitRepo(path, url, rev)
+        repo = ExternalGitRepo(cloned_path, url, rev)
 
     try:
         yield repo
@@ -116,7 +123,7 @@ def fetch_external(self, paths: Iterable, **kwargs):
         download_results = []
         failed = 0
 
-        paths = [PathInfo(self.root_dir) / path for path in paths]
+        paths = [PathInfo(self.scm.root_dir) / path for path in paths]
 
         def download_update(result):
             download_results.append(result)
@@ -145,19 +152,19 @@ def get_external(self, path, dest):
         else:
             # git-only erepo with no cache, just copy files directly
             # to dest
-            path = PathInfo(self.root_dir) / path
+            path = PathInfo(self.scm.root_dir) / path
             if not self.repo_tree.exists(path):
                 raise PathMissingError(path, self.url)
             self.repo_tree.copytree(path, dest)
 
 
 class ExternalRepo(Repo, BaseExternalRepo):
-    def __init__(self, root_dir, url, rev, for_write=False):
+    def __init__(self, root_dir, path, url, rev, for_write=False):
         if for_write:
             super().__init__(root_dir)
         else:
             root_dir = os.path.realpath(root_dir)
-            super().__init__(root_dir, scm=Git(root_dir), rev=rev)
+            super().__init__(path, scm=Git(root_dir), rev=rev)
         self.url = url
         self._set_cache_dir()
         self._fix_upstream()
diff --git a/dvc/repo/__init__.py b/dvc/repo/__init__.py
index 685f179eeb..fadb71e21f 100644
--- a/dvc/repo/__init__.py
+++ b/dvc/repo/__init__.py
@@ -153,18 +153,20 @@ def __repr__(self):
     def find_root(cls, root=None, tree=None):
         root_dir = os.path.realpath(root or os.curdir)
 
-        if tree:
-            if tree.isdir(os.path.join(root_dir, cls.DVC_DIR)):
-                return root_dir
-            raise NotDvcRepoError(f"'{root}' does not contain DVC directory")
-
-        if not os.path.isdir(root_dir):
-            raise NotDvcRepoError(f"directory '{root}' does not exist")
+        is_dir = tree.isdir if tree else os.path.isdir
 
         while True:
             dvc_dir = os.path.join(root_dir, cls.DVC_DIR)
-            if os.path.isdir(dvc_dir):
+            if is_dir(dvc_dir):
                 return root_dir
+            if (
+                tree
+                and os.path.dirname(os.path.abspath(tree.tree_root))
+                == root_dir
+            ):
+                raise NotDvcRepoError(
+                    f"'{root}' does not contain DVC directory"
+                )
             if os.path.ismount(root_dir):
                 break
             root_dir = os.path.dirname(root_dir)
diff --git a/dvc/repo/get.py b/dvc/repo/get.py
index 1141b00772..7bc885825c 100644
--- a/dvc/repo/get.py
+++ b/dvc/repo/get.py
@@ -36,7 +36,9 @@ def get(url, path, out=None, rev=None):
     dpath = os.path.dirname(os.path.abspath(out))
     tmp_dir = os.path.join(dpath, "." + str(shortuuid.uuid()))
     try:
-        with external_repo(url=url, rev=rev) as repo:
+        with external_repo(
+            url=url, rev=rev, path=os.path.dirname(path)
+        ) as repo:
             if hasattr(repo, "cache"):
                 repo.cache.local.cache_dir = tmp_dir
 
diff --git a/dvc/repo/ls.py b/dvc/repo/ls.py
index e02d52116a..ab5006f7ab 100644
--- a/dvc/repo/ls.py
+++ b/dvc/repo/ls.py
@@ -1,3 +1,5 @@
+import os
+
 from dvc.exceptions import PathMissingError
 from dvc.path_info import PathInfo
 
@@ -29,8 +31,10 @@ def ls(
     """
     from dvc.external_repo import external_repo
 
-    with external_repo(url, rev) as repo:
-        path_info = PathInfo(repo.root_dir)
+    d_path = os.path.dirname(path) if path else None
+
+    with external_repo(url, rev, path=d_path if d_path else None) as repo:
+        path_info = PathInfo(repo.scm.root_dir)
         if path:
             path_info /= path