diff --git a/routes/teams.php b/routes/teams.php
index 9939a6a7..def00553 100644
--- a/routes/teams.php
+++ b/routes/teams.php
@@ -10,11 +10,11 @@ use Domain\Teams\Controllers\ConvertFolderIntoTeamFolderController;
 Route::apiResource('/invitations', InvitationsController::class);
 
 Route::group(['middleware' => ['auth:sanctum']], function () {
+    Route::get('/shared-with-me/{id}', BrowseSharedWithMeController::class);
     Route::apiResource('/folders', TeamFoldersController::class);
 
     Route::post('/folders/{folder}/convert', ConvertFolderIntoTeamFolderController::class);
     Route::delete('/folders/{folder}/leave', LeaveTeamFolderController::class);
     Route::get('/folders/{folder}/tree', NavigationTreeController::class);
 
-    Route::get('/shared-with-me/{id}', BrowseSharedWithMeController::class);
 });
diff --git a/src/Domain/Teams/Actions/UpdateMembersAction.php b/src/Domain/Teams/Actions/UpdateMembersAction.php
index b7cc31e8..a45a8159 100644
--- a/src/Domain/Teams/Actions/UpdateMembersAction.php
+++ b/src/Domain/Teams/Actions/UpdateMembersAction.php
@@ -6,7 +6,10 @@ use Domain\Folders\Models\Folder;
 
 class UpdateMembersAction
 {
-    // TODO: after removing user from team folder from administrator, set file owner
+    public function __construct(
+        public TransferContentOwnershipToTeamFolderOwnerAction $transferContentOwnership,
+    ) {}
+
     public function __invoke(Folder $folder, $members): void
     {
         $existingMembers = $folder
@@ -24,6 +27,9 @@ class UpdateMembersAction
                 ->where('parent_id', $folder->id)
                 ->whereIn('user_id', $deletedMembers->toArray())
                 ->delete();
+
+            // Transfer files/folders ownership to team folder owner
+            $deletedMembers->each(fn ($memberId) => ($this->transferContentOwnership)($folder, $memberId));
         }
 
         // Update privileges
diff --git a/tests/Domain/Teams/TeamManagementTest.php b/tests/Domain/Teams/TeamManagementTest.php
index 85fb0047..e7b40abb 100644
--- a/tests/Domain/Teams/TeamManagementTest.php
+++ b/tests/Domain/Teams/TeamManagementTest.php
@@ -296,8 +296,10 @@ class TeamManagementTest extends TestCase
         $user = User::factory()
             ->create();
 
-        $members = User::factory()
-            ->count(2)
+        $member = User::factory()
+            ->create();
+
+        $deletedMember = User::factory()
             ->create();
 
         $folder = Folder::factory()
@@ -306,26 +308,45 @@ class TeamManagementTest extends TestCase
                 'team_folder' => 1,
             ]);
 
+        // Create fake file record
+        File::factory()
+            ->create([
+                'name'      => 'Member File',
+                'basename'  => 'fake-file.zip',
+                'parent_id' => $folder->id,
+                'user_id'   => $deletedMember->id,
+                'type'      => 'file',
+            ]);
+
+        // Create fake file
+        $fakeFile = UploadedFile::fake()
+            ->create('fake-file.zip', 2000, 'application/zip');
+
+        // Put fake file into correct directory
+        Storage::putFileAs("files/{$deletedMember->id}", $fakeFile, 'fake-file.zip');
+
+        // Attach members to the team folder
         DB::table('team_folder_members')
             ->insert([
                 [
                     'parent_id'  => $folder->id,
-                    'user_id'    => $members[0]->id,
+                    'user_id'    => $member->id,
                     'permission' => 'can-edit',
                 ],
                 [
                     'parent_id'  => $folder->id,
-                    'user_id'    => $members[1]->id,
+                    'user_id'    => $deletedMember->id,
                     'permission' => 'can-edit',
                 ],
             ]);
 
+        // Update team folder members
         $this
             ->actingAs($user)
             ->patchJson("/api/teams/folders/{$folder->id}", [
                 'members'     => [
                     [
-                        'id'         => $members[0]->id,
+                        'id'         => $member->id,
                         'permission' => 'can-edit',
                     ],
                 ],
@@ -333,10 +354,14 @@ class TeamManagementTest extends TestCase
             ])
             ->assertCreated();
 
+        // Check if file was moved from member directory to owner directory
+        Storage::assertMissing("files/{$deletedMember->id}/fake-file.zip");
+        Storage::assertExists("files/{$user->id}/fake-file.zip");
+
         $this
             ->assertDatabaseCount('team_folder_members', 1)
             ->assertDatabaseMissing('team_folder_members', [
-                'user_id' => $members[1]->id,
+                'user_id' => $deletedMember->id,
             ]);
     }