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The barbarians come, and the player with the least amount of active knights has a city and 5 settlements on the board.

What happens?

The city would normally get knocked down to a settlement, but all of his settlements are already on the board.

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up vote 12 down vote accepted

You turn your city marker, and treat it as if it were a settlement. From the Catan FAQ:

FAQ - Frequently Asked Questions Barbarians III: Players are Defeated - What happens if I have to downgrade a city to a settlement but don’t have another settlement in stock?

Answer Turn one of your cities on its side and treat it as a settlement until you have upgraded it to a city again.

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In 3rd edition, the Sabotage card says to turn a city on its side until it can be repaired (Ore + Wood). Turning a city on its side to mark it as a settlement as well can lead to confusion... best to use a different kind of marker when playing 3rd edition (e.g. put a coin under it). – TheAmigo Apr 9 at 18:50

In the games we play I turn the city upside down (to act as a marker for a town) and declare the village supply to be at -1. The player will need to build at least two cities before (s)he can build another new village.

I tried finding an official ruling, but it does not seem to be mentioned in a manual.

Page 11 only has this, which completely ignores this not-quite-so-rare situation.

Part of page 11

[Edit] The computer game Catan: Cities and knight from Catan GmbH seems to agree with this.

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