diff --git a/docs/systems/dm-system.md b/docs/systems/dm-system.md
index ccbdced3..6b66b7bc 100644
--- a/docs/systems/dm-system.md
+++ b/docs/systems/dm-system.md
@@ -759,7 +759,7 @@ Returns the channel's `ownerHomeInstance`. Used by all owner-only DM operations
 | `dm_channel_updated` | Call `updateDmMetadata(dmChannelId, { name, icon })` |
 | `dm_member_added` | Normalize remote user assets, upsert into `userViews`, call `addDmMember(dmChannelId, user)` |
 | `dm_member_removed` | Call `removeDmMember(dmChannelId, userId)` |
-| `dm_owner_updated` | Call `updateDmOwner(dmChannelId, newOwnerId)` |
+| `dm_owner_updated` | Call `updateDmOwner(dmChannelId, newOwnerId, newOwnerHomeUserId?, newOwnerHomeInstance?)` — the optional home-identity fields keep the channel's federation routing cache fresh after a manual transfer |
 | `dm_message_created` / `dm_message_updated` | Normalize message assets, upsert `message.user` and `message.replyTo?.user` into `userViews` |
 
 ### New DM Modal (`NewDmModal.tsx`)
@@ -869,7 +869,7 @@ For full wire formats, see `docs/systems/websocket.md`.
 | `dm_channel_updated` | S->C | Group metadata (`name`/`icon`) updated; payload `{ dmChannelId, name, icon }` (no `metadataUpdatedAt` — server-side version vector only) |
 | `dm_member_added` | S->C | Incremental member add (not bootstrap) |
 | `dm_member_removed` | S->C | Member leave/kick |
-| `dm_owner_updated` | S->C | Ownership transfer (auto on owner-leave OR manual via `POST /api/dm/:id/transfer`) |
+| `dm_owner_updated` | S->C | Ownership transfer (auto on owner-leave OR manual via `POST /api/dm/:id/transfer`). Payload: `{ dmChannelId, newOwnerId, newOwnerHomeUserId?, newOwnerHomeInstance? }` — the home-identity fields are populated on every new emission so the client can keep `dmChannel.ownerHomeInstance` (and thus `getOwnerInstanceForDm` routing) in sync without waiting for a `ready` refresh. Receivers tolerate omission for legacy senders. |
 
 ### Content Events
 
@@ -895,3 +895,4 @@ For full wire formats, see `docs/systems/websocket.md`.
 | Raw JSON in DM sidebar previews | DM sidebar showed `{"event":"space_invite",...}` / `{"event":"member_added",...}` as the last-message preview | `DmLastMessagePreview` shape omitted `type`, so the client could not distinguish system from user messages and rendered `lastMessage.content` verbatim. | Added `type` to `DmLastMessagePreview`, populated it from `dm_messages.type` in every server emission site, and routed the sidebar through a single `formatDmSidebarPreview` helper that renders human-readable text for each system event. |
 | Owner-only requests routed to wrong instance after manual transfer (latent) | After `POST /api/dm/:id/transfer` moved ownership to a member whose `homeInstance` differed from the channel's pinned serving origin, owner-only client calls (`updateMetadata`, `kickMember`, `transferOwnership`) routed via `getChannelOrigin` would emit outbox events with `sourceInstance !== ownerHomeInstance`, and all peers would reject them as `attribution_mismatch`. Latent only because pre-polish there was no kick endpoint and no metadata edit; auto-transfer-on-leave masked the issue (the leaver IS the actor, and `member_remove reason='leave'` accepts any source). | Added `getOwnerInstanceForDm(channelId)` exported next to `getChannelOrigin`. All four owner-only API client methods (`updateMetadata`, `kickMember`, `transferOwnership` — and any future owner-only routes) call `getApiForOrigin(getOwnerInstanceForDm(channelId))` instead of channel origin. Non-owner operations are unchanged. |
 | Kick / transfer to federated member always failed with "user not a member" | `DELETE /api/dm/:id/members/:targetUserId` and `POST /api/dm/:id/transfer` accepted only a local user id. The client passed `canonical.id` from `useCanonicalUserView`, which returns the user's HOME id when the home view is cached. After owner-routing the request to the owner instance, the owner instance's `dm_members.userId` (its own local replicated id) never matched the home id, so `isDmMember` returned false. | Both endpoints now accept federated identification (`homeUserId` + `homeInstance`) — the transfer endpoint takes them in the body, the kick endpoint reads `homeInstance` from a query string and treats the URL segment as a homeUserId. Server resolves via `resolveOrCreateReplicatedUser` before membership check. Mirrors the `addDmMember` pattern. Client `kickMember` / `transferOwnership` accept an optional `federated` arg and pass it when the target has `homeUserId` + `homeInstance` populated. |
+| Ownership transfer back-and-forth diverged between instances | After A→B transfer succeeded, B→A was applied locally but rejected by A's peer with `unauthorized_source`; ownership permanently disagreed between instances. Compounded by the client never updating its in-memory `dmChannel.ownerHomeInstance` from the `dm_owner_updated` WS event, so `getOwnerInstanceForDm` returned the previous owner's origin after the WS broadcast (relevant only if the same session re-attempts an owner-only op). | Two compounding bugs: (1) `transferGroupDmOwnership` wrote `users.homeInstance` verbatim into `dm_channels.ownerHomeInstance` — a BARE host (`orbit.ddns.net`) for federated owners. (2) `processOwnershipTransferEvent` (and `processMemberRemoveEvent` for kicks) compared `sourceInstance` (always full URL) to `channel.ownerHomeInstance` with strict string equality, mis-firing on the bare-vs-full mismatch. (3) `dm_owner_updated` WS event omitted `newOwnerHomeUserId` / `newOwnerHomeInstance`, so the client couldn't refresh its routing cache after a successful transfer. | (a) Both authority checks now compare via `normalizeOriginForCompare`. (b) Every write site that persists `dm_channels.ownerHomeInstance` (`transferGroupDmOwnership`, `POST /api/dm/group` post-create federation, lazy federation in `POST /api/dm/:id/members`, `processMemberAddEvent` bootstrap, `processOwnershipTransferEvent` receiver storage) canonicalizes through a new `canonicalizeHomeInstance` helper in `federationAuth.ts` — full URL is the canonical storage form, matching how `sourceInstance` always arrives. (c) `dm_owner_updated` WS event was extended with optional `newOwnerHomeUserId` and `newOwnerHomeInstance` fields, and the client `updateDmOwner` action writes them when present (guarding against legacy senders by leaving the existing values untouched if omitted). |
diff --git a/docs/systems/federation.md b/docs/systems/federation.md
index 6cfd3a67..9def1a02 100644
--- a/docs/systems/federation.md
+++ b/docs/systems/federation.md
@@ -803,10 +803,10 @@ Older peers that omit these fields fall back to safe defaults (null name/icon, `
 ### ownership_transfer (`processOwnershipTransferEvent` -- `federation.ts:1938`)
 
 1. Find channel by `federatedId` -- if not found, accept idempotently
-2. Validate authority: `sourceInstance === channel.ownerHomeInstance`
+2. Validate authority: `normalizeOriginForCompare(sourceInstance) === normalizeOriginForCompare(channel.ownerHomeInstance)`. Both sides are normalized to handle the bare-vs-full storage convention (see `dm-system.md` historical bugs for why this matters).
 3. Resolve new owner via `resolveOrCreateReplicatedUser` (**never** `resolveLocalUser` -- must guarantee valid ID)
-4. Update `dm_channels`: `ownerId`, `ownerHomeUserId`, `ownerHomeInstance`
-5. Broadcast `dm_owner_updated` WebSocket event
+4. Update `dm_channels`: `ownerId`, `ownerHomeUserId`, `ownerHomeInstance` (canonicalized to full URL on storage via `canonicalizeHomeInstance` so future authority checks stay stable)
+5. Broadcast `dm_owner_updated` WebSocket event with `newOwnerHomeUserId` + `newOwnerHomeInstance` so local clients can refresh their owner-routing cache without reconnecting
 6. Insert system message with previous owner as actor
 
 Triggered by both auto-transfer-on-leave and the manual `POST /api/dm/:id/transfer` endpoint — the receiver path is the same.
diff --git a/docs/systems/websocket.md b/docs/systems/websocket.md
index 456daa57..70394d17 100644
--- a/docs/systems/websocket.md
+++ b/docs/systems/websocket.md
@@ -149,7 +149,7 @@ Source: `packages/server/src/ws/handler.ts`, `packages/server/src/ws/events.ts`
 | `dm_channel_closed` | dmChannelId | user |
 | `dm_member_added` | dmChannelId, user | DM members |
 | `dm_member_removed` | dmChannelId, userId | DM members |
-| `dm_owner_updated` | dmChannelId, newOwnerId | DM members |
+| `dm_owner_updated` | dmChannelId, newOwnerId, newOwnerHomeUserId?, newOwnerHomeInstance? | DM members |
 
 ### Voice
 | type | fields | scope |
diff --git a/packages/server/src/routes/dm.ts b/packages/server/src/routes/dm.ts
index 853f40a4..7da3e8ff 100644
--- a/packages/server/src/routes/dm.ts
+++ b/packages/server/src/routes/dm.ts
@@ -46,7 +46,7 @@ import {
   sendTypingRelay,
   normalizeIconForWire,
 } from '../utils/federationOutbox.js';
-import { getOurOrigin } from '../utils/federationAuth.js';
+import { getOurOrigin, canonicalizeHomeInstance } from '../utils/federationAuth.js';
 import type { FederationRelayEvent } from '@backspace/shared';
 import { resolveLocalUser, resolveOrCreateReplicatedUser } from './federation.js';
 
@@ -510,7 +510,16 @@ function transferGroupDmOwnership(
 
   const domainOrigin = isFederationRelayEnabled() ? getOurOrigin() : null;
   const newOwnerHomeUserId = newOwnerRow?.homeUserId || newOwnerId;
-  const newOwnerHomeInstance = newOwnerRow?.homeInstance || domainOrigin || '';
+  // Canonicalize to a full origin URL. `users.homeInstance` is stored as a
+  // bare host (e.g. `orbit.ddns.net`) for federated users, but
+  // `dm_channels.ownerHomeInstance` is compared against `sourceInstance`
+  // (always a full URL) in S2S authority checks. Storing the bare form here
+  // caused legitimate `ownership_transfer` events to be rejected with
+  // `unauthorized_source` after back-and-forth transfers — see the historical
+  // bug entry in `docs/systems/dm-system.md`.
+  const newOwnerHomeInstance = canonicalizeHomeInstance(
+    newOwnerRow?.homeInstance || domainOrigin || '',
+  );
 
   const ownerSysMsgId = generateSnowflake();
   const ownerNow = Date.now();
@@ -520,6 +529,11 @@ function transferGroupDmOwnership(
     newOwnerDisplayName,
   });
 
+  // Wire homeInstance values are canonicalized to full URLs so receivers store
+  // the canonical form too. Future authority checks then compare full-URL to
+  // full-URL without needing defensive normalization at every site.
+  const previousOwnerHomeInstanceWire =
+    canonicalizeHomeInstance(previousOwnerRow?.homeInstance || domainOrigin || '') ?? '';
   const transferPayload: FederationRelayEvent | null = federationActive
     ? {
         eventType: 'ownership_transfer',
@@ -531,11 +545,11 @@ function transferGroupDmOwnership(
         ownership: {
           newOwner: {
             homeUserId: newOwnerHomeUserId,
-            homeInstance: newOwnerHomeInstance || (domainOrigin ?? ''),
+            homeInstance: newOwnerHomeInstance ?? (domainOrigin ?? ''),
           },
           previousOwner: {
             homeUserId: previousOwnerRow?.homeUserId || previousOwnerId,
-            homeInstance: previousOwnerRow?.homeInstance || (domainOrigin ?? ''),
+            homeInstance: previousOwnerHomeInstanceWire,
           },
         },
       }
@@ -584,12 +598,17 @@ function transferGroupDmOwnership(
     .where(eq(schema.dmMembers.dmChannelId, channelId))
     .all();
 
-  // Broadcast dm_owner_updated to local members.
+  // Broadcast dm_owner_updated to local members. Include the new owner's
+  // home identity so receiving clients can update `dm.ownerHomeInstance`
+  // (and thus keep `getOwnerInstanceForDm` correct for the next owner-only
+  // request) without waiting for a fresh `ready` payload on reconnect.
   for (const member of members) {
     connectionManager.sendToUser(member.userId, {
       type: 'dm_owner_updated',
       dmChannelId: channelId,
       newOwnerId,
+      newOwnerHomeUserId,
+      newOwnerHomeInstance: newOwnerHomeInstance ?? null,
     });
   }
 
@@ -1211,7 +1230,9 @@ export async function dmRoutes(app: FastifyInstance): Promise<void> {
           .set({
             federatedId,
             ownerHomeUserId: callerUser?.homeUserId || request.userId,
-            ownerHomeInstance: callerUser?.homeInstance || domainOrigin,
+            // Canonicalize for federation-authority parity (see
+            // `transferGroupDmOwnership` for the full rationale).
+            ownerHomeInstance: canonicalizeHomeInstance(callerUser?.homeInstance || domainOrigin),
           })
           .where(eq(schema.dmChannels.id, dmChannelId))
           .run();
@@ -1754,7 +1775,9 @@ export async function dmRoutes(app: FastifyInstance): Promise<void> {
           .set({
             federatedId: newFederatedId,
             ownerHomeUserId: ownerUser?.homeUserId || dmChannel.ownerId!,
-            ownerHomeInstance: ownerUser?.homeInstance || domainOrigin,
+            // Canonicalize for federation-authority parity (see
+            // `transferGroupDmOwnership` for the full rationale).
+            ownerHomeInstance: canonicalizeHomeInstance(ownerUser?.homeInstance || domainOrigin),
           })
           .where(eq(schema.dmChannels.id, id))
           .run();
@@ -1763,7 +1786,7 @@ export async function dmRoutes(app: FastifyInstance): Promise<void> {
           ...dmChannel,
           federatedId: newFederatedId,
           ownerHomeUserId: ownerUser?.homeUserId || dmChannel.ownerId!,
-          ownerHomeInstance: ownerUser?.homeInstance || domainOrigin,
+          ownerHomeInstance: canonicalizeHomeInstance(ownerUser?.homeInstance || domainOrigin),
         };
       }
     }
diff --git a/packages/server/src/routes/federation.kick.test.ts b/packages/server/src/routes/federation.kick.test.ts
index a13d0c8e..cbcc70b8 100644
--- a/packages/server/src/routes/federation.kick.test.ts
+++ b/packages/server/src/routes/federation.kick.test.ts
@@ -287,6 +287,40 @@ describe('processMemberRemoveEvent — kick authority', () => {
     expect(vi.mocked(connectionManager.sendToDmMembers)).not.toHaveBeenCalled();
   });
 
+  it('accepts a kick when ownerHomeInstance is BARE and sourceInstance is FULL (bare-vs-full normalization)', async () => {
+    // Regression: pre-fix, `processMemberRemoveEvent` compared
+    // `sourceInstance` (full URL, from outbox worker) to `ownerHomeInstance`
+    // verbatim. After an `ownership_transfer` to a federated user, the
+    // column would be written as a bare host (`users.homeInstance`), causing
+    // legitimate downstream kicks to be rejected with `unauthorized_source`.
+    //
+    // The fix normalizes both sides via `normalizeOriginForCompare`. This
+    // test re-seeds the channel with a bare `ownerHomeInstance` to lock in
+    // the new behavior. Mirrors the ownership-transfer authority test.
+    seedChannelAndMembers();
+    // Overwrite ownerHomeInstance to the legacy bare form.
+    testDb.update(schema.dmChannels)
+      .set({ ownerHomeInstance: 'owner.test' })
+      .where(eq(schema.dmChannels.id, CHANNEL_ID))
+      .run();
+
+    const fed = await import('./federation.js');
+    const event = buildKickEvent('evt-kick-bare-owner');
+
+    const accepted: string[] = [];
+    const rejected: Array<{ messageId: string; reason: string }> = [];
+    fed.processMemberRemoveEvent(event, OWNER_ORIGIN, testDb, accepted, rejected);
+
+    expect(rejected).toEqual([]);
+    expect(accepted).toEqual([event.messageId]);
+
+    // Victim's dm_members row was deleted (kick applied)
+    const victimRow = testDb.select().from(schema.dmMembers)
+      .where(and(eq(schema.dmMembers.dmChannelId, CHANNEL_ID), eq(schema.dmMembers.userId, VICTIM_USER_ID)))
+      .get();
+    expect(victimRow).toBeUndefined();
+  });
+
   it('accepts a self-leave from any source instance (not the owner instance) and removes the leaver', async () => {
     seedChannelAndMembers();
     const fed = await import('./federation.js');
diff --git a/packages/server/src/routes/federation.ownershipTransfer.test.ts b/packages/server/src/routes/federation.ownershipTransfer.test.ts
new file mode 100644
index 00000000..e11793de
--- /dev/null
+++ b/packages/server/src/routes/federation.ownershipTransfer.test.ts
@@ -0,0 +1,352 @@
+// Receiver-side authority and storage tests for `processOwnershipTransferEvent`.
+//
+// The headline regression these tests pin down:
+//
+//   On a federated back-and-forth — A transfers ownership to B (federated), B
+//   transfers it back to A — the second event was rejected at the receiver
+//   with `unauthorized_source` because `dm_channels.ownerHomeInstance` was
+//   written as a bare host (`orbit.ddns.net`) by
+//   `transferGroupDmOwnership` (which copies `users.homeInstance`) while
+//   `sourceInstance` always arrives as a full URL (`https://orbit.ddns.net`).
+//   The strict-string-equality check fired, the event went back into the
+//   outbox, and every retry hit the same mismatch — divergent ownership
+//   between the two instances stuck until manual repair.
+//
+// The fix is two-fold:
+//
+//   1. Authority check normalizes both sides via `normalizeOriginForCompare`
+//      so legacy bare-vs-full rows accept legitimate transfers.
+//   2. Both the sender (`transferGroupDmOwnership`) and the receiver
+//      (`processOwnershipTransferEvent`) canonicalize `ownerHomeInstance` to a
+//      full origin URL on storage, so going forward the column is uniform.
+//
+// These tests cover the receiver — sender canonicalization is covered by the
+// existing `dm.transfer.test.ts`.
+import { describe, it, expect, beforeEach, vi } from 'vitest';
+import Database from 'better-sqlite3';
+import { drizzle } from 'drizzle-orm/better-sqlite3';
+import fs from 'node:fs';
+import path from 'node:path';
+import { fileURLToPath } from 'node:url';
+import { eq } from 'drizzle-orm';
+import * as schema from '../db/schema.js';
+import { setWorkerId } from '../utils/snowflake.js';
+import type { FederationRelayEvent } from '@backspace/shared';
+
+setWorkerId(5);
+
+const __dirname = path.dirname(fileURLToPath(import.meta.url));
+
+type TestDb = ReturnType<typeof drizzle<typeof schema>>;
+let sqlite: Database.Database;
+let testDb: TestDb;
+
+vi.mock('../db/index.js', () => ({
+  getDb: () => testDb,
+  getRawDb: () => sqlite,
+  schema,
+}));
+
+vi.mock('../config.js', () => ({
+  config: {
+    domain: 'local.test',
+    port: 3000,
+    host: '0.0.0.0',
+    jwtSecret: 'test-secret-12345678901234567890123456789012',
+    maxUploadSize: 100 * 1024 * 1024,
+    registrationOpen: true,
+    uploadDir: '/tmp/bs-fed-transfer-test',
+  },
+}));
+
+vi.mock('../ws/handler.js', () => ({
+  connectionManager: {
+    sendToUser: vi.fn(),
+    sendToSpace: vi.fn(),
+    sendToDmMembers: vi.fn(),
+    sendToAdmins: vi.fn(),
+    getAllOnlineUserIds: () => [],
+    evictFederatedCallsForHost: vi.fn(),
+    federatedCalls: new Map(),
+    isUserOnline: vi.fn(),
+    lateBindFederatedCall: vi.fn(),
+  },
+}));
+
+import { connectionManager } from '../ws/handler.js';
+
+function applyMigrations(db: Database.Database): void {
+  const migrationsDir = path.resolve(__dirname, '../../drizzle');
+  const files = fs.readdirSync(migrationsDir).filter(f => f.endsWith('.sql')).sort();
+  for (const f of files) {
+    const sql = fs.readFileSync(path.join(migrationsDir, f), 'utf8');
+    for (const stmt of sql.split(/-->\s*statement-breakpoint/)) {
+      const clean = stmt.trim();
+      if (clean) db.exec(clean);
+    }
+  }
+}
+
+// Identities used by these tests. Owner is on `owner.test`, new owner is on
+// `new.test`. The previous owner / source for the transfer event is the owner.
+const OWNER_ORIGIN_FULL = 'https://owner.test';
+const OWNER_ORIGIN_BARE = 'owner.test';
+const NEW_OWNER_ORIGIN_FULL = 'https://new.test';
+const NEW_OWNER_ORIGIN_BARE = 'new.test';
+const FEDERATED_ID = 'fed-transfer-1';
+const CHANNEL_ID = 'ch-transfer-local-1';
+
+const OWNER_USER_ID = 'owner-user-stub';
+const OWNER_HOME_USER_ID = 'home-owner-1';
+
+const NEW_OWNER_USER_ID = 'new-owner-stub';
+const NEW_OWNER_HOME_USER_ID = 'home-new-owner-1';
+
+function seedUsers(): void {
+  const now = Date.now();
+  testDb.insert(schema.users).values({
+    id: OWNER_USER_ID,
+    username: 'owner@owner.test',
+    displayName: 'owner',
+    passwordHash: '!federation-replicated',
+    status: 'offline',
+    isAdmin: 0,
+    homeInstance: OWNER_ORIGIN_BARE,
+    homeUserId: OWNER_HOME_USER_ID,
+    createdAt: now,
+  }).run();
+
+  testDb.insert(schema.users).values({
+    id: NEW_OWNER_USER_ID,
+    username: 'new@new.test',
+    displayName: 'new owner',
+    passwordHash: '!federation-replicated',
+    status: 'offline',
+    isAdmin: 0,
+    homeInstance: NEW_OWNER_ORIGIN_BARE,
+    homeUserId: NEW_OWNER_HOME_USER_ID,
+    createdAt: now,
+  }).run();
+}
+
+interface SeedOpts {
+  ownerHomeInstance: string;
+}
+
+function seedChannel(opts: SeedOpts): void {
+  const now = Date.now();
+  testDb.insert(schema.dmChannels).values({
+    id: CHANNEL_ID,
+    federatedId: FEDERATED_ID,
+    ownerId: OWNER_USER_ID,
+    ownerHomeUserId: OWNER_HOME_USER_ID,
+    ownerHomeInstance: opts.ownerHomeInstance,
+    name: 'group',
+    icon: null,
+    metadataUpdatedAt: 1000,
+    createdAt: now,
+  }).run();
+  testDb.insert(schema.dmMembers).values({ dmChannelId: CHANNEL_ID, userId: OWNER_USER_ID, closed: 0 }).run();
+  testDb.insert(schema.dmMembers).values({ dmChannelId: CHANNEL_ID, userId: NEW_OWNER_USER_ID, closed: 0 }).run();
+}
+
+function buildTransferEvent(opts: {
+  messageId?: string;
+  newOwnerHomeInstance?: string;
+  previousOwnerHomeInstance?: string;
+} = {}): FederationRelayEvent {
+  return {
+    eventType: 'ownership_transfer',
+    contextType: 'dm',
+    messageId: opts.messageId ?? 'evt-transfer-1',
+    federatedId: FEDERATED_ID,
+    encryptionVersion: 0,
+    timestamp: Date.now(),
+    ownership: {
+      newOwner: {
+        homeUserId: NEW_OWNER_HOME_USER_ID,
+        homeInstance: opts.newOwnerHomeInstance ?? NEW_OWNER_ORIGIN_FULL,
+      },
+      previousOwner: {
+        homeUserId: OWNER_HOME_USER_ID,
+        homeInstance: opts.previousOwnerHomeInstance ?? OWNER_ORIGIN_FULL,
+      },
+    },
+  };
+}
+
+beforeEach(() => {
+  sqlite = new Database(':memory:');
+  testDb = drizzle(sqlite, { schema });
+  applyMigrations(sqlite);
+  seedUsers();
+  vi.mocked(connectionManager.sendToDmMembers).mockReset();
+});
+
+describe('processOwnershipTransferEvent — authority + canonicalization', () => {
+  it('accepts a transfer when ownerHomeInstance is BARE and sourceInstance is FULL (legacy storage)', async () => {
+    // Legacy state — `transferGroupDmOwnership` used to copy `users.homeInstance`
+    // verbatim (bare host) for federated new owners. With the fix, this
+    // pre-existing row must still accept legitimate inbound transfers.
+    seedChannel({ ownerHomeInstance: OWNER_ORIGIN_BARE });
+    const fed = await import('./federation.js');
+    const event = buildTransferEvent();
+
+    const accepted: string[] = [];
+    const rejected: Array<{ messageId: string; reason: string }> = [];
+    fed.processOwnershipTransferEvent(event, OWNER_ORIGIN_FULL, testDb, accepted, rejected);
+
+    expect(rejected).toEqual([]);
+    expect(accepted).toEqual([event.messageId]);
+
+    const channel = testDb.select().from(schema.dmChannels).where(eq(schema.dmChannels.id, CHANNEL_ID)).get();
+    expect(channel?.ownerId).toBe(NEW_OWNER_USER_ID);
+    expect(channel?.ownerHomeUserId).toBe(NEW_OWNER_HOME_USER_ID);
+    // Receiver canonicalizes to full URL on storage so future authority
+    // checks are stable regardless of what the wire format was.
+    expect(channel?.ownerHomeInstance).toBe(NEW_OWNER_ORIGIN_FULL);
+  });
+
+  it('accepts a transfer when ownerHomeInstance is FULL and sourceInstance is FULL (current happy path)', async () => {
+    seedChannel({ ownerHomeInstance: OWNER_ORIGIN_FULL });
+    const fed = await import('./federation.js');
+    const event = buildTransferEvent();
+
+    const accepted: string[] = [];
+    const rejected: Array<{ messageId: string; reason: string }> = [];
+    fed.processOwnershipTransferEvent(event, OWNER_ORIGIN_FULL, testDb, accepted, rejected);
+
+    expect(rejected).toEqual([]);
+    expect(accepted).toEqual([event.messageId]);
+    const channel = testDb.select().from(schema.dmChannels).where(eq(schema.dmChannels.id, CHANNEL_ID)).get();
+    expect(channel?.ownerId).toBe(NEW_OWNER_USER_ID);
+    expect(channel?.ownerHomeInstance).toBe(NEW_OWNER_ORIGIN_FULL);
+  });
+
+  it('rejects a transfer when the source peer cannot attest the previous owner (attribution_mismatch)', async () => {
+    // First-line attribution check: `previousOwner.homeInstance` must match
+    // `sourceInstance` (or be us). An attacker peer cannot attest a transfer
+    // on behalf of a user whose home isn't them.
+    seedChannel({ ownerHomeInstance: OWNER_ORIGIN_FULL });
+    const fed = await import('./federation.js');
+    const event = buildTransferEvent({ messageId: 'evt-transfer-bad-source' });
+
+    const accepted: string[] = [];
+    const rejected: Array<{ messageId: string; reason: string }> = [];
+    fed.processOwnershipTransferEvent(event, 'https://attacker.test', testDb, accepted, rejected);
+
+    expect(accepted).toEqual([]);
+    expect(rejected).toEqual([{ messageId: event.messageId, reason: 'attribution_mismatch' }]);
+
+    // No mutation
+    const channel = testDb.select().from(schema.dmChannels).where(eq(schema.dmChannels.id, CHANNEL_ID)).get();
+    expect(channel?.ownerId).toBe(OWNER_USER_ID);
+    expect(channel?.ownerHomeInstance).toBe(OWNER_ORIGIN_FULL);
+  });
+
+  it('rejects a transfer when the source matches previousOwner but is NOT the channel\'s current owner instance (unauthorized_source)', async () => {
+    // Authority check at the channel level: even if a peer can attest the
+    // previous owner, the channel's current `ownerHomeInstance` must still
+    // match the source. This guards against an outdated peer trying to
+    // forward an old transfer after ownership has moved on.
+    //
+    // Setup: channel currently owned by `new.test` (after some other prior
+    // transfer this receiver already applied). An event arrives FROM
+    // `owner.test` claiming `previousOwner` is on `owner.test`. Attribution
+    // is fine (source attests its own user), but the channel says the
+    // current authority is `new.test` — reject as `unauthorized_source`.
+    seedChannel({ ownerHomeInstance: NEW_OWNER_ORIGIN_FULL });
+    const fed = await import('./federation.js');
+    const event = buildTransferEvent({
+      messageId: 'evt-transfer-stale-source',
+      previousOwnerHomeInstance: OWNER_ORIGIN_FULL,
+    });
+
+    const accepted: string[] = [];
+    const rejected: Array<{ messageId: string; reason: string }> = [];
+    fed.processOwnershipTransferEvent(event, OWNER_ORIGIN_FULL, testDb, accepted, rejected);
+
+    expect(accepted).toEqual([]);
+    expect(rejected).toEqual([{ messageId: event.messageId, reason: 'unauthorized_source' }]);
+  });
+
+  it('canonicalizes ownerHomeInstance on storage even when the wire payload sends a bare host', async () => {
+    // Defensive: a legacy peer may still send the bare host on the wire after
+    // an upgrade. Receiver storage must end up canonical regardless.
+    seedChannel({ ownerHomeInstance: OWNER_ORIGIN_FULL });
+    const fed = await import('./federation.js');
+    const event = buildTransferEvent({
+      messageId: 'evt-transfer-bare-wire',
+      newOwnerHomeInstance: NEW_OWNER_ORIGIN_BARE,
+    });
+
+    const accepted: string[] = [];
+    const rejected: Array<{ messageId: string; reason: string }> = [];
+    fed.processOwnershipTransferEvent(event, OWNER_ORIGIN_FULL, testDb, accepted, rejected);
+
+    expect(rejected).toEqual([]);
+    expect(accepted).toEqual([event.messageId]);
+    const channel = testDb.select().from(schema.dmChannels).where(eq(schema.dmChannels.id, CHANNEL_ID)).get();
+    expect(channel?.ownerHomeInstance).toBe(NEW_OWNER_ORIGIN_FULL);
+  });
+
+  it('broadcasts dm_owner_updated with newOwnerHomeUserId + newOwnerHomeInstance so clients keep owner-routing fresh', async () => {
+    seedChannel({ ownerHomeInstance: OWNER_ORIGIN_FULL });
+    const fed = await import('./federation.js');
+    const event = buildTransferEvent({ messageId: 'evt-transfer-broadcast' });
+
+    const accepted: string[] = [];
+    const rejected: Array<{ messageId: string; reason: string }> = [];
+    fed.processOwnershipTransferEvent(event, OWNER_ORIGIN_FULL, testDb, accepted, rejected);
+
+    expect(rejected).toEqual([]);
+    const sendSpy = vi.mocked(connectionManager.sendToDmMembers);
+    const ownerUpdatedCalls = sendSpy.mock.calls.filter(c => (c[1] as { type?: string }).type === 'dm_owner_updated');
+    expect(ownerUpdatedCalls).toHaveLength(1);
+    const payload = ownerUpdatedCalls[0]![1] as {
+      type: string;
+      dmChannelId: string;
+      newOwnerId: string;
+      newOwnerHomeUserId?: string | null;
+      newOwnerHomeInstance?: string | null;
+    };
+    expect(payload).toMatchObject({
+      type: 'dm_owner_updated',
+      dmChannelId: CHANNEL_ID,
+      newOwnerId: NEW_OWNER_USER_ID,
+      newOwnerHomeUserId: NEW_OWNER_HOME_USER_ID,
+      newOwnerHomeInstance: NEW_OWNER_ORIGIN_FULL,
+    });
+  });
+
+  it('is idempotent on replay — repeats short-circuit at the (sourceInstance, messageId) dedup', async () => {
+    seedChannel({ ownerHomeInstance: OWNER_ORIGIN_BARE });
+    const fed = await import('./federation.js');
+    const event = buildTransferEvent({ messageId: 'evt-transfer-replay' });
+
+    const accepted1: string[] = [];
+    const rejected1: Array<{ messageId: string; reason: string }> = [];
+    fed.processOwnershipTransferEvent(event, OWNER_ORIGIN_FULL, testDb, accepted1, rejected1);
+
+    // Second delivery — the new ownerHomeInstance on the channel is now
+    // `new.test`; running the same event again must NOT clobber owner back
+    // because the dedup short-circuits.
+    const accepted2: string[] = [];
+    const rejected2: Array<{ messageId: string; reason: string }> = [];
+    fed.processOwnershipTransferEvent(event, OWNER_ORIGIN_FULL, testDb, accepted2, rejected2);
+
+    expect(accepted1).toEqual([event.messageId]);
+    expect(accepted2).toEqual([event.messageId]);
+    expect(rejected1).toEqual([]);
+    expect(rejected2).toEqual([]);
+
+    const channel = testDb.select().from(schema.dmChannels).where(eq(schema.dmChannels.id, CHANNEL_ID)).get();
+    expect(channel?.ownerId).toBe(NEW_OWNER_USER_ID);
+
+    // Only one system message inserted across two deliveries
+    const sysRows = testDb.select().from(schema.dmMessages)
+      .where(eq(schema.dmMessages.dmChannelId, CHANNEL_ID))
+      .all();
+    expect(sysRows.filter(r => r.sourceMessageId === event.messageId)).toHaveLength(1);
+  });
+});
diff --git a/packages/server/src/routes/federation.ts b/packages/server/src/routes/federation.ts
index ec8c4a9d..eac4a29a 100644
--- a/packages/server/src/routes/federation.ts
+++ b/packages/server/src/routes/federation.ts
@@ -6,7 +6,7 @@ import { pipeline } from 'node:stream/promises';
 import { Readable } from 'node:stream';
 import { eq, and, or, isNull, inArray, sql, desc } from 'drizzle-orm';
 import { authenticate, requireAdmin } from '../utils/auth.js';
-import { generateHmacSecret, getOurOrigin, parseFederationHeaders, verifySignature, verifyPeerSignature, buildFederationHeaders, normalizeOriginForCompare } from '../utils/federationAuth.js';
+import { generateHmacSecret, getOurOrigin, parseFederationHeaders, verifySignature, verifyPeerSignature, buildFederationHeaders, normalizeOriginForCompare, canonicalizeHomeInstance } from '../utils/federationAuth.js';
 import { generateSnowflake } from '../utils/snowflake.js';
 import { getDb, getRawDb, schema } from '../db/index.js';
 import { config } from '../config.js';
@@ -4120,7 +4120,10 @@ export async function processMemberAddEvent(
         federatedId: event.federatedId,
         ownerId,
         ownerHomeUserId: event.group.owner?.homeUserId ?? null,
-        ownerHomeInstance: event.group.owner?.homeInstance ?? null,
+        // Canonicalize on storage so future authority comparisons against
+        // `sourceInstance` (always a full URL) match cleanly. Defensive: older
+        // peers may have sent a bare host on the wire.
+        ownerHomeInstance: canonicalizeHomeInstance(event.group.owner?.homeInstance) ?? null,
         createdAt: now,
         name: bootstrapName,
         icon: bootstrapResolvedIcon,
@@ -4362,8 +4365,20 @@ export function processMemberRemoveEvent(
     return;
   }
 
-  // Validate authority: owner's instance for kicks, any instance for self-leave
-  if (event.membership.reason !== 'leave' && channel.ownerHomeInstance && sourceInstance !== channel.ownerHomeInstance) {
+  // Validate authority: owner's instance for kicks, any instance for self-leave.
+  //
+  // `sourceInstance` arrives as a full URL from `federationWorker.ts` (always
+  // `getOurOrigin()` on the sender). `channel.ownerHomeInstance`, however, can be
+  // stored either as a bare host (from `users.homeInstance`, written by
+  // `resolveOrCreateReplicatedUser` and by group DM ownership transfers to a
+  // federated user) OR as a full URL (group DM creation / transfers to a local
+  // user, which fall back to `domainOrigin = getOurOrigin()`). Strict equality
+  // here mis-fires for the bare-vs-full mismatch — see the historical bug entry
+  // in `docs/systems/dm-system.md`. Always compare through
+  // `normalizeOriginForCompare`, matching the established pattern for federation
+  // authority checks.
+  if (event.membership.reason !== 'leave' && channel.ownerHomeInstance &&
+      normalizeOriginForCompare(sourceInstance) !== normalizeOriginForCompare(channel.ownerHomeInstance)) {
     rejected.push({ messageId: event.messageId, reason: 'unauthorized_source' });
     return;
   }
@@ -4456,7 +4471,7 @@ export function processMemberRemoveEvent(
   accepted.push(event.messageId);
 }
 
-function processOwnershipTransferEvent(
+export function processOwnershipTransferEvent(
   event: FederationRelayEvent,
   sourceInstance: string,
   db: ReturnType<typeof getDb>,
@@ -4502,8 +4517,14 @@ function processOwnershipTransferEvent(
     return;
   }
 
-  // Validate authority: only the current owner's instance can transfer ownership
-  if (channel.ownerHomeInstance && sourceInstance !== channel.ownerHomeInstance) {
+  // Validate authority: only the current owner's instance can transfer ownership.
+  //
+  // See the matching note in `processMemberRemoveEvent`: `sourceInstance` is
+  // always a full URL but `channel.ownerHomeInstance` can be bare or full.
+  // Normalize both sides through `normalizeOriginForCompare` so we don't reject
+  // legitimate back-and-forth transfers that wrote a bare host into the column.
+  if (channel.ownerHomeInstance &&
+      normalizeOriginForCompare(sourceInstance) !== normalizeOriginForCompare(channel.ownerHomeInstance)) {
     rejected.push({ messageId: event.messageId, reason: 'unauthorized_source' });
     return;
   }
@@ -4522,11 +4543,19 @@ function processOwnershipTransferEvent(
     return;
   }
 
+  // Canonicalize to a full origin URL on storage so future authority checks
+  // can compare cleanly against `sourceInstance` (also a full URL). Mirrors
+  // the canonicalization performed in `transferGroupDmOwnership` on the
+  // sender side. Falls back to the wire value if normalization yields null
+  // (shouldn't happen for valid events; defensive).
+  const canonicalOwnerHome =
+    canonicalizeHomeInstance(event.ownership.newOwner.homeInstance) ?? event.ownership.newOwner.homeInstance;
+
   db.update(schema.dmChannels)
     .set({
       ownerId: newOwnerLocal.id,
       ownerHomeUserId: event.ownership.newOwner.homeUserId,
-      ownerHomeInstance: event.ownership.newOwner.homeInstance,
+      ownerHomeInstance: canonicalOwnerHome,
     })
     .where(eq(schema.dmChannels.id, channel.id))
     .run();
@@ -4535,6 +4564,8 @@ function processOwnershipTransferEvent(
     type: 'dm_owner_updated',
     dmChannelId: channel.id,
     newOwnerId: newOwnerLocal.id,
+    newOwnerHomeUserId: event.ownership.newOwner.homeUserId,
+    newOwnerHomeInstance: canonicalOwnerHome,
   });
 
   const prevOwnerLocal = event.ownership.previousOwner
diff --git a/packages/server/src/utils/federationAuth.ts b/packages/server/src/utils/federationAuth.ts
index 50580089..39a1e6d9 100644
--- a/packages/server/src/utils/federationAuth.ts
+++ b/packages/server/src/utils/federationAuth.ts
@@ -222,3 +222,28 @@ export function normalizeOriginForCompare(value: string | null | undefined): str
   if (!s) return null;
   return s.toLowerCase();
 }
+
+/**
+ * Canonicalize a homeInstance value to a full origin URL
+ * (e.g. `https://nova.ddns.net`) for storage on columns whose authority
+ * checks compare against `sourceInstance` (which is always a full URL).
+ *
+ * Accepts bare host (`nova.ddns.net`), scheme-prefixed (`https://...`), or
+ * `null` / empty / whitespace (returns `null`). `localhost`-style values keep
+ * `http://` if already present; otherwise the canonical default is `https://`.
+ *
+ * Use this at every write site that persists `dm_channels.ownerHomeInstance`
+ * so that S2S authority checks aren't broken by a bare-vs-full mismatch.
+ * Read paths should still normalize via `normalizeOriginForCompare` for
+ * defensive parity with legacy rows.
+ */
+export function canonicalizeHomeInstance(value: string | null | undefined): string | null {
+  if (!value) return null;
+  const s = value.trim();
+  if (!s) return null;
+  if (/^https?:\/\//i.test(s)) {
+    // Strip trailing slashes only — preserve the explicit scheme.
+    return s.replace(/\/+$/, '');
+  }
+  return `https://${s.replace(/\/+$/, '')}`;
+}
diff --git a/packages/shared/src/types.ts b/packages/shared/src/types.ts
index 1f8a60e9..5fc261bd 100644
--- a/packages/shared/src/types.ts
+++ b/packages/shared/src/types.ts
@@ -481,7 +481,20 @@ export type ServerEvent =
   | { type: 'federation_approval_request_received'; origin: string; instanceName?: string }
   | { type: 'peering_subscription_changed' }
   | { type: 'peering_notification_received'; kind: PeeringNotificationKind }
-  | { type: 'dm_owner_updated'; dmChannelId: string; newOwnerId: string }
+  | {
+      type: 'dm_owner_updated';
+      dmChannelId: string;
+      newOwnerId: string;
+      // Federation routing fields. Required for the client to keep
+      // `dmChannel.ownerHomeInstance` in sync after a transfer — otherwise
+      // owner-only API calls (`updateMetadata`, `kickMember`, `transferOwnership`)
+      // continue to route through the previous owner's home instance via
+      // `getOwnerInstanceForDm` until the user reconnects and receives a fresh
+      // `ready` payload. Always populated on new emissions; tolerated as
+      // optional for receivers connected to an older sender.
+      newOwnerHomeUserId?: string | null;
+      newOwnerHomeInstance?: string | null;
+    }
   | { type: 'pong' }
   | { type: 'error'; message: string };
 
diff --git a/packages/web/src/hooks/useWebSocket.ts b/packages/web/src/hooks/useWebSocket.ts
index f2f50427..7cd57db3 100644
--- a/packages/web/src/hooks/useWebSocket.ts
+++ b/packages/web/src/hooks/useWebSocket.ts
@@ -1113,7 +1113,18 @@ function handleEvent(origin: string, event: ServerEvent): void {
     case 'dm_owner_updated': {
       if (!isHome && !activePeerOrigins.has(origin)) break;
       const { updateDmOwner } = useSpaceStore.getState();
-      updateDmOwner(event.dmChannelId, event.newOwnerId);
+      // Pass the federation routing fields so the DM's `ownerHomeInstance`
+      // stays in sync with the server. Without this, `getOwnerInstanceForDm`
+      // routes the next owner-only API call (rename, icon, kick, transfer)
+      // through the PREVIOUS owner's home instance and the receiving peer
+      // rejects it as `unauthorized_source`. Older servers omit these fields
+      // — the store leaves the existing values untouched in that case.
+      updateDmOwner(
+        event.dmChannelId,
+        event.newOwnerId,
+        event.newOwnerHomeUserId ?? undefined,
+        event.newOwnerHomeInstance ?? undefined,
+      );
       break;
     }
 
diff --git a/packages/web/src/stores/spaceStore.ts b/packages/web/src/stores/spaceStore.ts
index 018c4486..a24923b6 100644
--- a/packages/web/src/stores/spaceStore.ts
+++ b/packages/web/src/stores/spaceStore.ts
@@ -129,7 +129,12 @@ interface SpaceState {
   removeDmChannel: (id: string) => void;
   addDmMember: (dmChannelId: string, user: User) => void;
   removeDmMember: (dmChannelId: string, userId: string) => void;
-  updateDmOwner: (dmChannelId: string, newOwnerId: string) => void;
+  updateDmOwner: (
+    dmChannelId: string,
+    newOwnerId: string,
+    newOwnerHomeUserId?: string,
+    newOwnerHomeInstance?: string,
+  ) => void;
   updateDmMetadata: (dmChannelId: string, patch: { name?: string | null; icon?: string | null }) => void;
   closeDm: (id: string) => Promise<void>;
   leaveDm: (id: string) => Promise<void>;
@@ -321,10 +326,19 @@ export const useSpaceStore = create<SpaceState>((set, get) => ({
     ),
   })),
 
-  updateDmOwner: (dmChannelId, newOwnerId) => set((state) => ({
-    dmChannels: state.dmChannels.map(dm =>
-      dm.id === dmChannelId ? { ...dm, ownerId: newOwnerId } : dm
-    ),
+  updateDmOwner: (dmChannelId, newOwnerId, newOwnerHomeUserId, newOwnerHomeInstance) => set((state) => ({
+    dmChannels: state.dmChannels.map(dm => {
+      if (dm.id !== dmChannelId) return dm;
+      const next = { ...dm, ownerId: newOwnerId };
+      // Only overwrite the federation routing fields when the caller supplies
+      // them. Older servers that omit these fields must not blank out the
+      // existing values — the DM would otherwise lose its owner-routing data
+      // and `getOwnerInstanceForDm` would silently fall back to '' (home),
+      // re-introducing the bug this WS extension fixes.
+      if (newOwnerHomeUserId !== undefined) next.ownerHomeUserId = newOwnerHomeUserId;
+      if (newOwnerHomeInstance !== undefined) next.ownerHomeInstance = newOwnerHomeInstance;
+      return next;
+    }),
   })),
 
   // Patches the group DM's display metadata (name + icon). Idempotent: a
diff --git a/packages/web/src/utils/groupDm.ownerRouting.test.ts b/packages/web/src/utils/groupDm.ownerRouting.test.ts
index b0d7aa6b..244cc94f 100644
--- a/packages/web/src/utils/groupDm.ownerRouting.test.ts
+++ b/packages/web/src/utils/groupDm.ownerRouting.test.ts
@@ -209,6 +209,58 @@ describe('group DM owner routing — api.dm.* (Task 5.2)', () => {
     });
   });
 
+  it('updateDmOwner keeps ownerHomeInstance in sync so the next owner-only op routes correctly', () => {
+    // Regression: the `dm_owner_updated` WS handler used to call
+    // updateDmOwner(channelId, newOwnerId) without the home-identity fields.
+    // After a manual back-and-forth transfer, `getOwnerInstanceForDm` then
+    // returned the PREVIOUS owner's home origin — the next owner-only call
+    // routed to the wrong instance and the receiver rejected the resulting
+    // federation event with `unauthorized_source`.
+    //
+    // The fix: WS event carries `newOwnerHomeUserId` + `newOwnerHomeInstance`
+    // and the store writes them. This test pins that behavior down.
+    const { updateDmOwner } = useSpaceStore.getState();
+    useSpaceStore.setState({
+      dmChannels: [{
+        ...baseDm,
+        ownerId: 'old-owner',
+        ownerHomeUserId: 'old-owner-home',
+        ownerHomeInstance: 'https://nova.test',
+      }],
+    });
+
+    updateDmOwner('dm-1', 'new-owner', 'new-owner-home', 'https://orbit.test');
+
+    const dm = useSpaceStore.getState().dmChannels.find(d => d.id === 'dm-1');
+    expect(dm?.ownerId).toBe('new-owner');
+    expect(dm?.ownerHomeUserId).toBe('new-owner-home');
+    expect(dm?.ownerHomeInstance).toBe('https://orbit.test');
+    expect(getOwnerInstanceForDm('dm-1')).toBe('https://orbit.test');
+  });
+
+  it('updateDmOwner does NOT clear existing federation routing fields when called without them (legacy server)', () => {
+    // An older server that hasn't shipped the WS payload extension yet would
+    // call updateDmOwner with only (channelId, newOwnerId). The store must
+    // not blank out the existing home fields, or `getOwnerInstanceForDm`
+    // would silently fall back to '' (home) — re-introducing the bug.
+    const { updateDmOwner } = useSpaceStore.getState();
+    useSpaceStore.setState({
+      dmChannels: [{
+        ...baseDm,
+        ownerId: 'old-owner',
+        ownerHomeUserId: 'old-owner-home',
+        ownerHomeInstance: 'https://nova.test',
+      }],
+    });
+
+    updateDmOwner('dm-1', 'new-owner');
+
+    const dm = useSpaceStore.getState().dmChannels.find(d => d.id === 'dm-1');
+    expect(dm?.ownerId).toBe('new-owner');
+    expect(dm?.ownerHomeUserId).toBe('old-owner-home');
+    expect(dm?.ownerHomeInstance).toBe('https://nova.test');
+  });
+
   it('non-owner-only op (sendMessage) is unaffected by ownerHomeInstance', async () => {
     // Owner routing is opt-in per method — sendMessage on the singleton api
     // must NOT consult ownerHomeInstance. It uses the channel's pinned origin