diff --git a/packages/server/src/server/workspace-git-service.runtime.integration.test.ts b/packages/server/src/server/workspace-git-service.runtime.integration.test.ts
index 358a80908b..a6c864603c 100644
--- a/packages/server/src/server/workspace-git-service.runtime.integration.test.ts
+++ b/packages/server/src/server/workspace-git-service.runtime.integration.test.ts
@@ -296,11 +296,10 @@ test("replayed common-ref observation survives runtime service reconstruction",
   await reconstructed.destroy(workspaceId);
 }, 20_000);
 
-test("selected sibling worktrees share common-ref fan-out without touching an unrelated workspace", async () => {
+test("selected sibling worktrees retain common-ref fan-out across lifecycle transitions", async () => {
   const root = await mkdtemp(path.join(tmpdir(), "paseo-runtime-git-fanout-"));
   cleanupRoots.push(root);
   const source = await createRepository(path.join(root, "source"));
-  const unrelated = await createRepository(path.join(root, "unrelated"));
   const runtimeIds = new Map<string, string>();
   const service = createWorkspaceRuntimeService({
     paseoHome: path.join(root, "paseo-home"),
@@ -325,13 +324,6 @@ test("selected sibling worktrees share common-ref fan-out without touching an un
       placement: { kind: "branch", branchName, baseRef: "main", worktreeSlug: branchName },
     });
   }
-  await service.create({
-    workspaceId: "unrelated",
-    runtimeId: "local",
-    project: { id: "unrelated-project", source: { kind: "host-directory", path: unrelated } },
-    placement: { kind: "existing" },
-  });
-
   let resolveFirst!: () => void;
   let resolveSibling!: () => void;
   const firstChanged = new Promise<void>((resolve) => {
@@ -349,10 +341,8 @@ test("selected sibling worktrees share common-ref fan-out without touching an un
   const siblingChangedAfterOwnerDestroy = new Promise<void>((resolve) => {
     resolveSiblingAfterOwnerDestroy = resolve;
   });
-  let unrelatedChanges = 0;
   const siblingA = await service.bind("sibling-a");
   const siblingB = await service.bind("sibling-b");
-  const unrelatedGit = await service.bind("unrelated");
   const subscriptions = [
     await observeWorkspaceGit(siblingA, () => {
       if (phase === "first-change") resolveFirst();
@@ -362,32 +352,22 @@ test("selected sibling worktrees share common-ref fan-out without touching an un
       if (phase === "after-pause-change") resolveSiblingAfterOwnerPause();
       if (phase === "after-destroy-change") resolveSiblingAfterOwnerDestroy();
     }),
-    await observeWorkspaceGit(unrelatedGit, () => {
-      unrelatedChanges += 1;
-    }),
   ];
   await createBranchThroughRuntime(service, "sibling-a", "shared-ref-change");
   await Promise.all([
     eventWithin(firstChanged, "first sibling ref update"),
     eventWithin(siblingChanged, "second sibling ref update"),
   ]);
-  expect(unrelatedChanges).toBe(0);
-
   await service.pause("sibling-a");
   phase = "after-pause-change";
   await createBranchThroughRuntime(service, "sibling-b", "shared-ref-after-owner-pause");
   await eventWithin(siblingChangedAfterOwnerPause, "sibling ref update after owner pause");
-  expect(unrelatedChanges).toBe(0);
-
   await service.destroy("sibling-a");
   phase = "after-destroy-change";
   await createBranchThroughRuntime(service, "sibling-b", "shared-ref-after-owner-destroy");
   await eventWithin(siblingChangedAfterOwnerDestroy, "sibling ref update after owner destroy");
-  expect(unrelatedChanges).toBe(0);
-
   await Promise.all(subscriptions.map((subscription) => subscription.unsubscribe()));
   await Promise.all([service.destroy("sibling-a"), service.destroy("sibling-b")]);
-  await service.destroy("unrelated");
 }, 20_000);
 
 test("sibling Git observations stay workspace-bound across pause, resume, and unsubscribe", async () => {
diff --git a/packages/server/src/server/workspace-runtime/internal/host-git-observation.posix.test.ts b/packages/server/src/server/workspace-runtime/internal/host-git-observation.posix.test.ts
index 670b3c914b..7ee3bd0fc3 100644
--- a/packages/server/src/server/workspace-runtime/internal/host-git-observation.posix.test.ts
+++ b/packages/server/src/server/workspace-runtime/internal/host-git-observation.posix.test.ts
@@ -1,5 +1,5 @@
 import { execFileSync } from "node:child_process";
-import { mkdir, mkdtemp, rm, writeFile } from "node:fs/promises";
+import { mkdir, mkdtemp, realpath, rm, writeFile } from "node:fs/promises";
 import { tmpdir } from "node:os";
 import path from "node:path";
 
@@ -11,6 +11,7 @@ import {
   type FileObserverCallback,
   type FileObserverOptions,
 } from "../../file-observer/index.js";
+import { getGitCommonDir } from "../../../utils/worktree.js";
 import { createHostGitObservationOwner } from "./host-git-observation.js";
 
 describe.runIf(process.platform !== "win32")("host Git observation on POSIX", () => {
@@ -22,17 +23,32 @@ describe.runIf(process.platform !== "win32")("host Git observation on POSIX", ()
       git(source, ["branch", "sibling"]);
       git(source, ["worktree", "add", sibling, "sibling"]);
       const unrelated = await repository(path.join(root, "unrelated"));
-      const owner = createHostGitObservationOwner();
+      const observer = new InstrumentedFileObserver();
+      const owner = createHostGitObservationOwner(observer);
+      let sourceChanges = 0;
+      let siblingChanges = 0;
+      let unrelatedChanges = 0;
 
       const [sourceSubscription, siblingSubscription] = await Promise.all([
-        owner.observe(source, () => undefined),
-        owner.observe(sibling, () => undefined),
+        owner.observe(source, () => {
+          sourceChanges += 1;
+        }),
+        owner.observe(sibling, () => {
+          siblingChanges += 1;
+        }),
       ]);
       expect(owner.getDiagnostics().activeObservationCount).toBe(1);
 
-      const unrelatedSubscription = await owner.observe(unrelated, () => undefined);
+      const unrelatedSubscription = await owner.observe(unrelated, () => {
+        unrelatedChanges += 1;
+      });
       expect(owner.getDiagnostics().activeObservationCount).toBe(2);
 
+      observer.emit(await realpath(await getGitCommonDir(source)));
+      expect(sourceChanges).toBe(1);
+      expect(siblingChanges).toBe(1);
+      expect(unrelatedChanges).toBe(0);
+
       await sourceSubscription.unsubscribe();
       expect(owner.getDiagnostics().activeObservationCount).toBe(2);
       await siblingSubscription.unsubscribe();
@@ -85,7 +101,7 @@ describe.runIf(process.platform !== "win32")("host Git observation on POSIX", ()
 
 class InstrumentedFileObserver implements FileObserver {
   readonly observer = createFileObserver();
-  readonly callbacks = new Set<FileObserverCallback>();
+  readonly callbacks = new Map<FileObserverCallback, string>();
   subscribeCount = 0;
 
   async subscribe(
@@ -94,7 +110,7 @@ class InstrumentedFileObserver implements FileObserver {
     options?: FileObserverOptions,
   ) {
     this.subscribeCount += 1;
-    this.callbacks.add(callback);
+    this.callbacks.set(callback, directory);
     const subscription = await this.observer.subscribe(directory, callback, options);
     let active = true;
     return {
@@ -109,7 +125,14 @@ class InstrumentedFileObserver implements FileObserver {
   }
 
   failActive(error: Error): void {
-    for (const callback of this.callbacks) callback(error, []);
+    for (const callback of this.callbacks.keys()) callback(error, []);
+  }
+
+  emit(directory: string): void {
+    for (const [callback, observedDirectory] of this.callbacks) {
+      if (observedDirectory === directory)
+        callback(null, [{ path: "refs/heads/main", type: "update" }]);
+    }
   }
 
   getDiagnostics() {