diff --git a/apps/files/lib/Command/TransferOwnership.php b/apps/files/lib/Command/TransferOwnership.php
index 4adb24d8637c..85c5f898f894 100644
--- a/apps/files/lib/Command/TransferOwnership.php
+++ b/apps/files/lib/Command/TransferOwnership.php
@@ -194,6 +194,14 @@ function (FileInfo $fileInfo) use ($progress, $self) {
 					$progress->advance();
 					$this->allFiles[] = $fileInfo;
 					if ($fileInfo->isEncrypted()) {
+						if (\OC::$server->getAppConfig()->getValue('encryption', 'useMasterKey', 0) !== 0) {
+							/**
+							 * We are not going to add this to encryptedFiles array.
+							 * Because its encrypted with masterKey and hence it doesn't
+							 * require user's specific password.
+							 */
+							return true;
+						}
 						$this->encryptedFiles[] = $fileInfo;
 					}
 					return true;
diff --git a/lib/private/Files/Filesystem.php b/lib/private/Files/Filesystem.php
index ba31bf53c818..f37816bc2bf6 100644
--- a/lib/private/Files/Filesystem.php
+++ b/lib/private/Files/Filesystem.php
@@ -944,6 +944,9 @@ public static function getDirectoryContent($directory, $mimetype_filter = '') {
 	 * @return string
 	 */
 	public static function getPath($id) {
+		if (self::$defaultInstance === null) {
+			throw new NotFoundException("defaultInstance is null");
+		}
 		return self::$defaultInstance->getPath($id);
 	}
 
diff --git a/lib/private/Files/Storage/Wrapper/Encryption.php b/lib/private/Files/Storage/Wrapper/Encryption.php
index 0bbe9e67d345..b4c270bb8d51 100644
--- a/lib/private/Files/Storage/Wrapper/Encryption.php
+++ b/lib/private/Files/Storage/Wrapper/Encryption.php
@@ -246,7 +246,7 @@ public function unlink($path) {
 			return $this->storage->unlink($path);
 		}
 
-		$encryptionModule = $this->getEncryptionModule($path);
+		$encryptionModule = ($this->encryptionManager->isEnabled()) ? $this->getEncryptionModule($path) : "";
 		if ($encryptionModule) {
 			$this->keyStorage->deleteAllFileKeys($this->getFullPath($path));
 		}
@@ -358,11 +358,12 @@ public function copy($path1, $path2) {
 	 *
 	 * @param string $path
 	 * @param string $mode
+	 * @param string|null $sourceFileOfRename
 	 * @return resource|bool
 	 * @throws GenericEncryptionException
 	 * @throws ModuleDoesNotExistsException
 	 */
-	public function fopen($path, $mode) {
+	public function fopen($path, $mode, $sourceFileOfRename = null) {
 
 		// check if the file is stored in the array cache, this means that we
 		// copy a file over to the versions folder, in this case we don't want to
@@ -378,7 +379,7 @@ public function fopen($path, $mode) {
 		$header = $this->getHeader($path);
 		$signed = (isset($header['signed']) && $header['signed'] === 'true') ? true : false;
 		$fullPath = $this->getFullPath($path);
-		$encryptionModuleId = $this->util->getEncryptionModuleId($header);
+		$encryptionModuleId = ($encryptionEnabled) ? $this->util->getEncryptionModuleId($header): "";
 
 		if ($this->util->isExcluded($fullPath) === false) {
 
@@ -457,7 +458,7 @@ public function fopen($path, $mode) {
 				}
 				$handle = \OC\Files\Stream\Encryption::wrap($source, $path, $fullPath, $header,
 					$this->uid, $encryptionModule, $this->storage, $this, $this->util, $this->fileHelper, $mode,
-					$size, $unencryptedSize, $headerSize, $signed);
+					$size, $unencryptedSize, $headerSize, $signed, $sourceFileOfRename);
 				return $handle;
 			}
 
@@ -569,7 +570,7 @@ protected function fixUnencryptedSize($path, $size, $unencryptedSize) {
 		fclose($stream);
 
 		// we have to decrypt the last chunk to get it actual size
-		$encryptionModule->begin($this->getFullPath($path), $this->uid, 'r', $header, []);
+		$encryptionModule->begin($this->getFullPath($path), $this->uid, 'r', $header, [], null);
 		$decryptedLastChunk = $encryptionModule->decrypt($lastChunkContentEncrypted, $lastChunkNr . 'end');
 		$decryptedLastChunk .= $encryptionModule->end($this->getFullPath($path), $lastChunkNr . 'end');
 
@@ -672,6 +673,12 @@ private function updateEncryptedVersion(Storage $sourceStorage, $sourceInternalP
 		// in case of a rename we need to manipulate the source cache because
 		// this information will be kept for the new target
 		if ($isRename) {
+			/*
+			 * Rename is a process of creating a new file. Here we try to use the
+			 * incremented version of source file, for the destination file.
+			 */
+			$encryptedVersion = $sourceStorage->getCache()->get($sourceInternalPath)['encryptedVersion'];
+			$cacheInformation['encryptedVersion'] = $encryptedVersion + 1;
 			$sourceStorage->getCache()->put($sourceInternalPath, $cacheInformation);
 		} else {
 			$this->getCache()->put($targetInternalPath, $cacheInformation);
@@ -690,7 +697,6 @@ private function updateEncryptedVersion(Storage $sourceStorage, $sourceInternalP
 	 * @throws \Exception
 	 */
 	private function copyBetweenStorage(Storage $sourceStorage, $sourceInternalPath, $targetInternalPath, $preserveMtime, $isRename) {
-
 		// for versions we have nothing to do, because versions should always use the
 		// key from the original file. Just create a 1:1 copy and done
 		if ($this->isVersion($targetInternalPath) ||
@@ -740,7 +746,12 @@ private function copyBetweenStorage(Storage $sourceStorage, $sourceInternalPath,
 		} else {
 			try {
 				$source = $sourceStorage->fopen($sourceInternalPath, 'r');
-				$target = $this->fopen($targetInternalPath, 'w');
+				if ($isRename) {
+					$absSourcePath = Filesystem::normalizePath($sourceStorage->getOwner($sourceInternalPath). '/' . $sourceInternalPath);
+					$target = $this->fopen($targetInternalPath, 'w', $absSourcePath);
+				} else {
+					$target = $this->fopen($targetInternalPath, 'w');
+				}
 				list(, $result) = \OC_Helper::streamCopy($source, $target);
 				fclose($source);
 				fclose($target);
diff --git a/lib/private/Files/Stream/Encryption.php b/lib/private/Files/Stream/Encryption.php
index 28690c2c8a9e..72f47e5f33b0 100644
--- a/lib/private/Files/Stream/Encryption.php
+++ b/lib/private/Files/Stream/Encryption.php
@@ -115,7 +115,8 @@ public function __construct() {
 			'unencryptedSize',
 			'encryptionStorage',
 			'headerSize',
-			'signed'
+			'signed',
+			'sourceFileOfRename'
 		];
 	}
 
@@ -155,6 +156,7 @@ public static function wrap($source, $internalPath, $fullPath, array $header,
 								$unencryptedSize,
 								$headerSize,
 								$signed,
+								$sourceFileOfRename = null,
 								$wrapper =  'OC\Files\Stream\Encryption') {
 
 		$context = stream_context_create([
@@ -172,7 +174,8 @@ public static function wrap($source, $internalPath, $fullPath, array $header,
 				'unencryptedSize' => $unencryptedSize,
 				'encryptionStorage' => $encStorage,
 				'headerSize' => $headerSize,
-				'signed' => $signed
+				'signed' => $signed,
+				'sourceFileOfRename' => $sourceFileOfRename
 			]
 		]);
 
@@ -228,7 +231,7 @@ protected function loadContext($name) {
 	}
 
 	public function stream_open($path, $mode, $options, &$opened_path) {
-		$this->loadContext('ocencryption');
+		$context = $this->loadContext('ocencryption');
 
 		$this->position = 0;
 		$this->cache = '';
@@ -254,7 +257,7 @@ public function stream_open($path, $mode, $options, &$opened_path) {
 		}
 
 		$accessList = $this->file->getAccessList($sharePath);
-		$this->newHeader = $this->encryptionModule->begin($this->fullPath, $this->uid, $mode, $this->header, $accessList);
+		$this->newHeader = $this->encryptionModule->begin($this->fullPath, $this->uid, $mode, $this->header, $accessList, $context['sourceFileOfRename']);
 
 		if (
 			$mode === 'w'
diff --git a/lib/public/Encryption/IEncryptionModule.php b/lib/public/Encryption/IEncryptionModule.php
index 07b0220b4df0..1f6c5c00b488 100644
--- a/lib/public/Encryption/IEncryptionModule.php
+++ b/lib/public/Encryption/IEncryptionModule.php
@@ -58,13 +58,15 @@ public function getDisplayName();
 	 * @param string $mode php stream open mode
 	 * @param array $header contains the header data read from the file
 	 * @param array $accessList who has access to the file contains the key 'users' and 'public'
+	 * @param string|null $sourceFileOfRename contains false or the rename source file. This is required
+	 * 						for version increment.
 	 *
 	 * $return array $header contain data as key-value pairs which should be
 	 *                       written to the header, in case of a write operation
 	 *                       or if no additional data is needed return a empty array
 	 * @since 8.1.0
 	 */
-	public function begin($path, $user, $mode, array $header, array $accessList);
+	public function begin($path, $user, $mode, array $header, array $accessList, $sourceFileOfRename);
 
 	/**
 	 * last chunk received. This is the place where you can perform some final
diff --git a/tests/integration/features/transfer-ownership.feature b/tests/integration/features/transfer-ownership.feature
index 686b74fb9b11..b73476557348 100644
--- a/tests/integration/features/transfer-ownership.feature
+++ b/tests/integration/features/transfer-ownership.feature
@@ -1,7 +1,6 @@
 Feature: transfer-ownership
 
 	# TODO: change to @no_default_encryption once all this works with master key
-	@no_encryption
 	Scenario: transfering ownership of a file
 		Given user "user0" exists
 		And user "user1" exists
@@ -12,7 +11,19 @@ Feature: transfer-ownership
 		And using received transfer folder of "user1" as dav path
 		Then Downloaded content when downloading file "/somefile.txt" with range "bytes=0-6" should be "This is"
 
-	@no_encryption
+	Scenario: transfering ownership of a file after updating the file
+		Given user "user0" exists
+		And user "user1" exists
+		And User "user0" uploads file "data/file_to_overwrite.txt" to "/PARENT/textfile0.txt"
+		And user "user0" uploads chunk file "1" of "3" with "AA" to "/PARENT/textfile0.txt"
+		And user "user0" uploads chunk file "2" of "3" with "BB" to "/PARENT/textfile0.txt"
+		And user "user0" uploads chunk file "3" of "3" with "CC" to "/PARENT/textfile0.txt"
+		When transfering ownership from "user0" to "user1"
+		Then the command was successful
+		And As an "user1"
+		And using received transfer folder of "user1" as dav path
+		Then Downloaded content when downloading file "/PARENT/textfile0.txt" with range "bytes=0-5" should be "AABBCC"
+
 	Scenario: transfering ownership of a folder
 		Given user "user0" exists
 		And user "user1" exists
@@ -24,7 +35,6 @@ Feature: transfer-ownership
 		And using received transfer folder of "user1" as dav path
 		Then Downloaded content when downloading file "/test/somefile.txt" with range "bytes=0-6" should be "This is"
 
-	@no_encryption
 	Scenario: transfering ownership of file shares
 		Given user "user0" exists
 		And user "user1" exists
@@ -36,7 +46,6 @@ Feature: transfer-ownership
 		And As an "user2"
 		Then Downloaded content when downloading file "/somefile.txt" with range "bytes=0-6" should be "This is"
 
-	@no_encryption
 	Scenario: transfering ownership of folder shared with third user
 		Given user "user0" exists
 		And user "user1" exists
@@ -49,7 +58,6 @@ Feature: transfer-ownership
 		And As an "user2"
 		Then Downloaded content when downloading file "/test/somefile.txt" with range "bytes=0-6" should be "This is"
 
-	@no_encryption
 	Scenario: transfering ownership of folder shared with transfer recipient
 		Given user "user0" exists
 		And user "user1" exists
@@ -63,7 +71,6 @@ Feature: transfer-ownership
 		And using received transfer folder of "user1" as dav path
 		And Downloaded content when downloading file "/test/somefile.txt" with range "bytes=0-6" should be "This is"
 
-	@no_encryption
 	Scenario: transfering ownership of folder doubly shared with third user
 		Given group "group1" exists
 		And user "user0" exists
@@ -79,7 +86,6 @@ Feature: transfer-ownership
 		And As an "user2"
 		Then Downloaded content when downloading file "/test/somefile.txt" with range "bytes=0-6" should be "This is"
 
-	@no_encryption
 	Scenario: transfering ownership does not transfer received shares
 		Given user "user0" exists
 		And user "user1" exists
@@ -92,7 +98,6 @@ Feature: transfer-ownership
 		And using received transfer folder of "user1" as dav path
 		Then as "user1" the folder "/test" does not exist
 
-	@no_encryption
 	@local_storage
 	Scenario: transfering ownership does not transfer external storage
 		Given user "user0" exists
@@ -103,7 +108,6 @@ Feature: transfer-ownership
 		And using received transfer folder of "user1" as dav path
 		Then as "user1" the folder "/local_storage" does not exist
 
-	@no_encryption
 	Scenario: transfering ownership does not fail with shared trashed files
 		Given user "user0" exists
 		And user "user1" exists
@@ -115,21 +119,18 @@ Feature: transfer-ownership
 		When transfering ownership from "user0" to "user1"
 		Then the command was successful
 
-	@no_encryption
 	Scenario: transfering ownership fails with invalid source user
 		Given user "user0" exists
 		When transfering ownership from "invalid_user" to "user0"
 		Then the command error output contains the text "Unknown source user"
 		And the command failed with exit code 1
 
-	@no_encryption
 	Scenario: transfering ownership fails with invalid target user
 		Given user "user0" exists
 		When transfering ownership from "user0" to "invalid_user"
 		Then the command error output contains the text "Unknown target user"
 		And the command failed with exit code 1
 
-	@no_encryption
 	Scenario: transfering ownership of a folder
 		Given user "user0" exists
 		And user "user1" exists
@@ -141,7 +142,6 @@ Feature: transfer-ownership
 		And using received transfer folder of "user1" as dav path
 		Then Downloaded content when downloading file "/test/somefile.txt" with range "bytes=0-6" should be "This is"
 
-	@no_encryption
 	Scenario: transfering ownership of file shares
 		Given user "user0" exists
 		And user "user1" exists
@@ -154,7 +154,6 @@ Feature: transfer-ownership
 		And As an "user2"
 		Then Downloaded content when downloading file "/somefile.txt" with range "bytes=0-6" should be "This is"
 
-	@no_encryption
 	Scenario: transfering ownership of folder shared with third user
 		Given user "user0" exists
 		And user "user1" exists
@@ -167,7 +166,6 @@ Feature: transfer-ownership
 		And As an "user2"
 		Then Downloaded content when downloading file "/test/somefile.txt" with range "bytes=0-6" should be "This is"
 
-	@no_encryption
 	Scenario: transfering ownership of folder shared with transfer recipient
 		Given user "user0" exists
 		And user "user1" exists
@@ -181,7 +179,6 @@ Feature: transfer-ownership
 		And using received transfer folder of "user1" as dav path
 		And Downloaded content when downloading file "/test/somefile.txt" with range "bytes=0-6" should be "This is"
 
-	@no_encryption
 	Scenario: transfering ownership of folder doubly shared with third user
 		Given group "group1" exists
 		And user "user0" exists
@@ -197,7 +194,6 @@ Feature: transfer-ownership
 		And As an "user2"
 		Then Downloaded content when downloading file "/test/somefile.txt" with range "bytes=0-6" should be "This is"
 
-	@no_encryption
 	Scenario: transfering ownership does not transfer received shares
 		Given user "user0" exists
 		And user "user1" exists
@@ -212,7 +208,6 @@ Feature: transfer-ownership
 		And using received transfer folder of "user1" as dav path
 		Then as "user1" the folder "/sub/test" does not exist
 
-	@no_encryption
 	@local_storage
 	Scenario: transfering ownership does not transfer external storage
 		Given user "user0" exists
@@ -224,7 +219,6 @@ Feature: transfer-ownership
 		And using received transfer folder of "user1" as dav path
 		Then as "user1" the folder "/local_storage" does not exist
 
-	@no_encryption
 	Scenario: transfering ownership fails with invalid source user
 		Given user "user0" exists
 		And User "user0" created a folder "/sub"
@@ -232,7 +226,6 @@ Feature: transfer-ownership
 		Then the command error output contains the text "Unknown source user"
 		And the command failed with exit code 1
 
-	@no_encryption
 	Scenario: transfering ownership fails with invalid target user
 		Given user "user0" exists
 		And User "user0" created a folder "/sub"
@@ -240,7 +233,6 @@ Feature: transfer-ownership
 		Then the command error output contains the text "Unknown target user"
 		And the command failed with exit code 1
 
-	@no_encryption
 	Scenario: transfering ownership fails with invalid path
 		Given user "user0" exists
 		And user "user1" exists