How to fix Error: Error creating SQL Database: ServerNotFound in Terraform

Change your azurerm_mssql_database resource to reference the server using its ID instead of a hardcoded name:

# Before (incorrect)
resource "azurerm_mssql_database" "example" {
  name        = "mydb"
  server_name = "myserver"
  # This may fail if server_name is wrong or not yet created
}

# After (correct)
resource "azurerm_mssql_database" "example" {
  name      = "mydb"
  server_id = azurerm_mssql_server.example.id
  # This ensures proper dependency and uses the actual server ID
}

This automatically creates an implicit dependency and uses the resource's actual ID.

If you must use server_name (not recommended), add an explicit depends_on to ensure the server is created first:

resource "azurerm_mssql_database" "example" {
  name        = "mydb"
  server_name = azurerm_mssql_server.example.name
  server_id   = azurerm_mssql_server.example.id
  
  depends_on = [
    azurerm_mssql_server.example,
  ]
}

Note: Using server_id is always preferable as it implicitly creates this dependency.

Confirm that:
1. The SQL Server resource is defined in your Terraform configuration
2. The server's resource_group_name matches the database's resource_group_name
3. Both resources are in the same Azure subscription

Check your azurerm_mssql_server resource:

resource "azurerm_mssql_server" "example" {
  name                         = "myserver"
  resource_group_name          = azurerm_resource_group.example.name
  location                     = azurerm_resource_group.example.location
  version                      = "12.0"
  administrator_login          = "sqladmin"
  administrator_login_password = var.sql_admin_password
}

If the server was just created, Azure may need time to propagate it. Try:

terraform refresh
terraform apply

If the error persists after refresh, the server truly doesn't exist or there's a reference problem. If it succeeds on the second apply, you've identified a timing issue—consider adding a small depends_on or using timeouts.

If the database creation previously succeeded but now fails, the server may have been deleted outside Terraform:

terraform state list
terraform state show 'azurerm_mssql_server.example'

If the server doesn't appear in state but you expect it to exist, either:
- Re-create the server resource
- Import the existing server: terraform import azurerm_mssql_server.example /subscriptions/{id}/resourceGroups/{group}/providers/Microsoft.Sql/servers/{server}

Ensure you're running a recent azurerm provider version (3.0+). Check your required_providers block:

terraform {
  required_providers {
    azurerm = {
      source  = "hashicorp/azurerm"
      version = "~> 3.100"
    }
  }
}

Run terraform init to upgrade, then retry:

terraform init -upgrade
terraform plan