diff --git a/pkgs/typed-racket-pkgs/typed-racket-lib/typed-racket/typecheck/tc-lambda-unit.rkt b/pkgs/typed-racket-pkgs/typed-racket-lib/typed-racket/typecheck/tc-lambda-unit.rkt
index 94bc4592c2..5ef586df0c 100644
--- a/pkgs/typed-racket-pkgs/typed-racket-lib/typed-racket/typecheck/tc-lambda-unit.rkt
+++ b/pkgs/typed-racket-pkgs/typed-racket-lib/typed-racket/typecheck/tc-lambda-unit.rkt
@@ -120,8 +120,8 @@
       [else
        (define base-rest-type
          (cond
-          [rest-ty rest-ty]
           [(type-annotation rest) (get-type rest #:default Univ)]
+          [rest-ty rest-ty]
           [else Univ]))
        (define extra-types
          (if (<= arg-len tys-len)
diff --git a/pkgs/typed-racket-pkgs/typed-racket-test/tests/typed-racket/fail/pr10936.rkt b/pkgs/typed-racket-pkgs/typed-racket-test/tests/typed-racket/fail/pr10936.rkt
new file mode 100644
index 0000000000..855aa11de5
--- /dev/null
+++ b/pkgs/typed-racket-pkgs/typed-racket-test/tests/typed-racket/fail/pr10936.rkt
@@ -0,0 +1,9 @@
+#;
+(exn-pred 2)
+#lang typed/racket
+(define: my-rest : (All (elem) (elem elem * -> (Listof elem)))
+  (lambda ( #{ arg : elem} . #{ tail : (Listof elem) }) 
+    (rest tail)))
+(define: my-rest2 : (All (elem) (elem elem * -> (Listof elem)))
+  (lambda ( #{ arg : elem} . #{ tail : elem }) 
+    (rest tail)))