diff --git a/interface/src/Application.cpp b/interface/src/Application.cpp
index b8e17738f3..20c93a7ae5 100644
--- a/interface/src/Application.cpp
+++ b/interface/src/Application.cpp
@@ -2456,7 +2456,7 @@ void Application::update(float deltaTime) {
 
         if (_physicsEngine.hasOutgoingChanges()) {
             _entitySimulation.lock();
-            _entitySimulation.handleOutgoingChanges(_physicsEngine.getOutgoingChanges());
+            _entitySimulation.handleOutgoingChanges(_physicsEngine.getOutgoingChanges(), _physicsEngine.getSessionID());
             _entitySimulation.handleCollisionEvents(_physicsEngine.getCollisionEvents());
             _entitySimulation.unlock();
             _physicsEngine.dumpStatsIfNecessary();
diff --git a/libraries/entities/src/EntityItem.cpp b/libraries/entities/src/EntityItem.cpp
index 470426d55e..e618504a5c 100644
--- a/libraries/entities/src/EntityItem.cpp
+++ b/libraries/entities/src/EntityItem.cpp
@@ -569,7 +569,7 @@ int EntityItem::readEntityDataFromBuffer(const unsigned char* data, int bytesLef
         READ_ENTITY_PROPERTY(PROP_USER_DATA, QString, setUserData);
 
         if (args.bitstreamVersion >= VERSION_ENTITIES_HAVE_ACCELERATION) {
-            READ_ENTITY_PROPERTY(PROP_SIMULATOR_ID, QUuid, setSimulatorID);
+            READ_ENTITY_PROPERTY(PROP_SIMULATOR_ID, QUuid, updateSimulatorID);
         }
 
         if (args.bitstreamVersion >= VERSION_ENTITIES_HAS_MARKETPLACE_ID) {
@@ -946,7 +946,7 @@ bool EntityItem::setProperties(const EntityItemProperties& properties) {
     SET_ENTITY_PROPERTY_FROM_PROPERTIES(collisionsWillMove, updateCollisionsWillMove);
     SET_ENTITY_PROPERTY_FROM_PROPERTIES(locked, setLocked);
     SET_ENTITY_PROPERTY_FROM_PROPERTIES(userData, setUserData);
-    SET_ENTITY_PROPERTY_FROM_PROPERTIES(simulatorID, setSimulatorID);
+    SET_ENTITY_PROPERTY_FROM_PROPERTIES(simulatorID, updateSimulatorID);
     SET_ENTITY_PROPERTY_FROM_PROPERTIES(marketplaceID, setMarketplaceID);
     SET_ENTITY_PROPERTY_FROM_PROPERTIES(name, setName);
 
@@ -1191,16 +1191,16 @@ void EntityItem::updateVelocityInDomainUnits(const glm::vec3& value) {
 void EntityItem::updateVelocity(const glm::vec3& value) { 
     auto delta = glm::distance(_velocity, value);
     if (delta > IGNORE_LINEAR_VELOCITY_DELTA) {
+        _dirtyFlags |= EntityItem::DIRTY_LINEAR_VELOCITY;
         const float MIN_LINEAR_SPEED = 0.001f;
         if (glm::length(value) < MIN_LINEAR_SPEED) {
             _velocity = ENTITY_ITEM_ZERO_VEC3;
         } else {
             _velocity = value;
-        }
-        _dirtyFlags |= EntityItem::DIRTY_LINEAR_VELOCITY;
-
-        if (delta > ACTIVATION_LINEAR_VELOCITY_DELTA) {
-            _dirtyFlags |= EntityItem::DIRTY_PHYSICS_ACTIVATION;
+            // only activate when setting non-zero velocity
+            if (delta > ACTIVATION_LINEAR_VELOCITY_DELTA) {
+                _dirtyFlags |= EntityItem::DIRTY_PHYSICS_ACTIVATION;
+            }
         }
     }
 }
@@ -1238,9 +1238,10 @@ void EntityItem::updateAngularVelocity(const glm::vec3& value) {
             _angularVelocity = ENTITY_ITEM_ZERO_VEC3;
         } else {
             _angularVelocity = value;
-        }
-        if (delta > ACTIVATION_ANGULAR_VELOCITY_DELTA) {
-            _dirtyFlags |= EntityItem::DIRTY_PHYSICS_ACTIVATION;
+            // only activate when setting non-zero velocity
+            if (delta > ACTIVATION_ANGULAR_VELOCITY_DELTA) {
+                _dirtyFlags |= EntityItem::DIRTY_PHYSICS_ACTIVATION;
+            }
         }
     }
 }
@@ -1275,8 +1276,14 @@ void EntityItem::updateLifetime(float value) {
 }
 
 void EntityItem::setSimulatorID(const QUuid& value) {
+    _simulatorID = value;
+    _simulatorIDChangedTime = usecTimestampNow();
+}
+
+void EntityItem::updateSimulatorID(const QUuid& value) {
     if (_simulatorID != value) {
         _simulatorID = value;
         _simulatorIDChangedTime = usecTimestampNow();
+        _dirtyFlags |= EntityItem::DIRTY_SIMULATOR_ID;
     }
 }
diff --git a/libraries/entities/src/EntityItem.h b/libraries/entities/src/EntityItem.h
index b9dc14251c..cc3ef54f53 100644
--- a/libraries/entities/src/EntityItem.h
+++ b/libraries/entities/src/EntityItem.h
@@ -82,6 +82,7 @@ public:
         DIRTY_UPDATEABLE = 0x0200,
         DIRTY_MATERIAL = 0x00400,
         DIRTY_PHYSICS_ACTIVATION = 0x0800, // we want to activate the object
+        DIRTY_SIMULATOR_ID = 0x1000,
         DIRTY_TRANSFORM = DIRTY_POSITION | DIRTY_ROTATION,
         DIRTY_VELOCITIES = DIRTY_LINEAR_VELOCITY | DIRTY_ANGULAR_VELOCITY
     };
@@ -286,6 +287,7 @@ public:
 
     QUuid getSimulatorID() const { return _simulatorID; }
     void setSimulatorID(const QUuid& value);
+    void updateSimulatorID(const QUuid& value);
     quint64 getSimulatorIDChangedTime() const { return _simulatorIDChangedTime; }
     
     const QString& getMarketplaceID() const { return _marketplaceID; }
diff --git a/libraries/entities/src/EntityItemProperties.cpp b/libraries/entities/src/EntityItemProperties.cpp
index 2d68a20022..c86d9b5efd 100644
--- a/libraries/entities/src/EntityItemProperties.cpp
+++ b/libraries/entities/src/EntityItemProperties.cpp
@@ -495,7 +495,7 @@ void EntityItemProperties::copyFromScriptValue(const QScriptValue& object) {
     COPY_PROPERTY_FROM_QSCRIPTVALUE(locked, bool, setLocked);
     COPY_PROPERTY_FROM_QSCRIPTVALUE(textures, QString, setTextures);
     COPY_PROPERTY_FROM_QSCRIPTVALUE(userData, QString, setUserData);
-    COPY_PROPERTY_FROM_QSCRIPTVALUE(simulatorID, QUuid, setSimulatorID);
+    //COPY_PROPERTY_FROM_QSCRIPTVALUE(simulatorID, QUuid, setSimulatorID);  DO NOT accept this info from QScriptValue
     COPY_PROPERTY_FROM_QSCRIPTVALUE(text, QString, setText);
     COPY_PROPERTY_FROM_QSCRIPTVALUE(lineHeight, float, setLineHeight);
     COPY_PROPERTY_FROM_QSCRIPTVALUE(textColor, xColor, setTextColor);
diff --git a/libraries/entities/src/EntityScriptingInterface.cpp b/libraries/entities/src/EntityScriptingInterface.cpp
index 46ca70aa43..62e61dc039 100644
--- a/libraries/entities/src/EntityScriptingInterface.cpp
+++ b/libraries/entities/src/EntityScriptingInterface.cpp
@@ -61,13 +61,12 @@ void EntityScriptingInterface::setEntityTree(EntityTree* modelTree) {
     }
 }
 
-
-
-void setSimId(EntityItemProperties& propertiesWithSimID, EntityItem* entity) {
+void bidForSimulationOwnership(EntityItemProperties& properties) {
+    // We make a bid for simulation ownership by declaring our sessionID as simulation owner 
+    // in the outgoing properties.  The EntityServer may accept the bid or might not.
     auto nodeList = DependencyManager::get<NodeList>();
     const QUuid myNodeID = nodeList->getSessionUUID();
-    propertiesWithSimID.setSimulatorID(myNodeID);
-    entity->setSimulatorID(myNodeID);
+    properties.setSimulatorID(myNodeID);
 }
 
 
@@ -89,7 +88,7 @@ EntityItemID EntityScriptingInterface::addEntity(const EntityItemProperties& pro
         entity->setLastBroadcast(usecTimestampNow());
         if (entity) {
             // This Node is creating a new object.  If it's in motion, set this Node as the simulator.
-            setSimId(propertiesWithSimID, entity);
+            bidForSimulationOwnership(propertiesWithSimID);
         } else {
             qCDebug(entities) << "script failed to add new Entity to local Octree";
             success = false;
@@ -163,29 +162,31 @@ EntityItemID EntityScriptingInterface::editEntity(EntityItemID entityID, const E
         }
     }
 
-    EntityItemProperties propertiesWithSimID = properties;
-
     // If we have a local entity tree set, then also update it. We can do this even if we don't know
     // the actual id, because we can edit out local entities just with creatorTokenID
     if (_entityTree) {
         _entityTree->lockForWrite();
-        _entityTree->updateEntity(entityID, propertiesWithSimID, canAdjustLocks());
+        _entityTree->updateEntity(entityID, properties);
         _entityTree->unlock();
     }
 
     // if at this point, we know the id, send the update to the entity server
     if (entityID.isKnownID) {
         // make sure the properties has a type, so that the encode can know which properties to include
-        if (propertiesWithSimID.getType() == EntityTypes::Unknown) {
+        if (properties.getType() == EntityTypes::Unknown) {
             EntityItem* entity = _entityTree->findEntityByEntityItemID(entityID);
             if (entity) {
+                // we need to change the outgoing properties, so we make a copy, modify, and send.
+                EntityItemProperties modifiedProperties = properties;
                 entity->setLastBroadcast(usecTimestampNow());
-                propertiesWithSimID.setType(entity->getType());
-                setSimId(propertiesWithSimID, entity);
+                modifiedProperties.setType(entity->getType());
+                bidForSimulationOwnership(modifiedProperties);
+                queueEntityMessage(PacketTypeEntityAddOrEdit, entityID, modifiedProperties);
+                return entityID;
             }
         }
 
-        queueEntityMessage(PacketTypeEntityAddOrEdit, entityID, propertiesWithSimID);
+        queueEntityMessage(PacketTypeEntityAddOrEdit, entityID, properties);
     }
     
     return entityID;
diff --git a/libraries/entities/src/EntitySimulation.h b/libraries/entities/src/EntitySimulation.h
index a73afe9fd7..f5a100eba0 100644
--- a/libraries/entities/src/EntitySimulation.h
+++ b/libraries/entities/src/EntitySimulation.h
@@ -37,7 +37,8 @@ const int DIRTY_SIMULATION_FLAGS =
         EntityItem::DIRTY_SHAPE |
         EntityItem::DIRTY_LIFETIME |
         EntityItem::DIRTY_UPDATEABLE |
-        EntityItem::DIRTY_MATERIAL;
+        EntityItem::DIRTY_MATERIAL |
+        EntityItem::DIRTY_SIMULATOR_ID;
 
 class EntitySimulation : public QObject {
 Q_OBJECT
diff --git a/libraries/entities/src/EntityTree.cpp b/libraries/entities/src/EntityTree.cpp
index ef49aca87a..e90a01383b 100644
--- a/libraries/entities/src/EntityTree.cpp
+++ b/libraries/entities/src/EntityTree.cpp
@@ -86,7 +86,7 @@ void EntityTree::postAddEntity(EntityItem* entity) {
     emit addingEntity(entity->getEntityItemID());
 }
 
-bool EntityTree::updateEntity(const EntityItemID& entityID, const EntityItemProperties& properties, bool allowLockChange) {
+bool EntityTree::updateEntity(const EntityItemID& entityID, const EntityItemProperties& properties, const SharedNodePointer& senderNode) {
     EntityTreeElement* containingElement = getContainingElement(entityID);
     if (!containingElement) {
         qCDebug(entities) << "UNEXPECTED!!!!  EntityTree::updateEntity() entityID doesn't exist!!! entityID=" << entityID;
@@ -99,22 +99,34 @@ bool EntityTree::updateEntity(const EntityItemID& entityID, const EntityItemProp
         return false;
     }
 
-    return updateEntityWithElement(existingEntity, properties, containingElement, allowLockChange);
+    return updateEntityWithElement(existingEntity, properties, containingElement, senderNode);
 }
 
-bool EntityTree::updateEntity(EntityItem* entity, const EntityItemProperties& properties, bool allowLockChange) {
+bool EntityTree::updateEntity(EntityItem* entity, const EntityItemProperties& properties, const SharedNodePointer& senderNode) {
     EntityTreeElement* containingElement = getContainingElement(entity->getEntityItemID());
     if (!containingElement) {
         qCDebug(entities) << "UNEXPECTED!!!!  EntityTree::updateEntity() entity-->element lookup failed!!! entityID=" 
             << entity->getEntityItemID();
         return false;
     }
-    return updateEntityWithElement(entity, properties, containingElement, allowLockChange);
+    return updateEntityWithElement(entity, properties, containingElement, senderNode);
 }
 
 bool EntityTree::updateEntityWithElement(EntityItem* entity, const EntityItemProperties& origProperties, 
-                                         EntityTreeElement* containingElement, bool allowLockChange) {
+                                         EntityTreeElement* containingElement, const SharedNodePointer& senderNode) {
     EntityItemProperties properties = origProperties;
+
+    bool allowLockChange;
+    QUuid senderID;
+    if (senderNode.isNull()) {
+        auto nodeList = DependencyManager::get<NodeList>();
+        allowLockChange = nodeList->getThisNodeCanAdjustLocks();
+        senderID = nodeList->getSessionUUID();
+    } else {
+        allowLockChange = senderNode->getCanAdjustLocks();
+        senderID = senderNode->getUUID();
+    }
+
     if (!allowLockChange && (entity->getLocked() != properties.getLocked())) {
         qCDebug(entities) << "Refusing disallowed lock adjustment.";
         return false;
@@ -134,22 +146,41 @@ bool EntityTree::updateEntityWithElement(EntityItem* entity, const EntityItemPro
             }
         }
     } else {
-        if (properties.simulatorIDChanged() &&
-            !entity->getSimulatorID().isNull() &&
-            properties.getSimulatorID() != entity->getSimulatorID()) {
-            // A Node is trying to take ownership of the simulation of this entity from another Node.  Only allow this
-            // if ownership hasn't recently changed.
-            if (usecTimestampNow() - entity->getSimulatorIDChangedTime() < SIMULATOR_CHANGE_LOCKOUT_PERIOD) {
-                qCDebug(entities) << "simulator_change_lockout_period:"
-                                  << entity->getSimulatorID() << "to" << properties.getSimulatorID();
+        if (getIsServer()) {
+            bool simulationBlocked = !entity->getSimulatorID().isNull();
+            if (properties.simulatorIDChanged()) {
+                QUuid submittedID = properties.getSimulatorID();
+                // a legit interface will only submit their own ID or NULL:
+                if (submittedID.isNull()) {
+                    if (entity->getSimulatorID() == senderID) {
+                        // We only allow the simulation owner to clear their own simulationID's.
+                        simulationBlocked = false;
+                    }
+                    // else: We assume the sender really did believe it was the simulation owner when it sent
+                } else if (submittedID == senderID) {
+                    // the sender is trying to take or continue ownership
+                    if (entity->getSimulatorID().isNull() || entity->getSimulatorID() == senderID) {
+                        simulationBlocked = false;
+                    } else {
+                        // the sender is trying to steal ownership from another simulator
+                        // so we apply the ownership change filter
+                        if (usecTimestampNow() - entity->getSimulatorIDChangedTime() > SIMULATOR_CHANGE_LOCKOUT_PERIOD) {
+                            simulationBlocked = false;
+                        }
+                    }
+                } else {
+                    // the entire update is suspect --> ignore it
+                    return false;
+                }
+            }
+            if (simulationBlocked) {
                 // squash the physics-related changes.
                 properties.setSimulatorIDChanged(false);
                 properties.setPositionChanged(false);
                 properties.setRotationChanged(false);
-            } else {
-                qCDebug(entities) << "allowing simulatorID change";
             }
         }
+        // else client accepts what the server says
 
         QString entityScriptBefore = entity->getScript();
         uint32_t preFlags = entity->getDirtyFlags();
@@ -664,7 +695,7 @@ int EntityTree::processEditPacketData(PacketType packetType, const unsigned char
                             qCDebug(entities) << "User [" << senderNode->getUUID() << "] editing entity. ID:" << entityItemID;
                             qCDebug(entities) << "   properties:" << properties;
                         }
-                        updateEntity(entityItemID, properties, senderNode->getCanAdjustLocks());
+                        updateEntity(entityItemID, properties, senderNode);
                         existingEntity->markAsChangedOnServer();
                     } else {
                         qCDebug(entities) << "User attempted to edit an unknown entity. ID:" << entityItemID;
diff --git a/libraries/entities/src/EntityTree.h b/libraries/entities/src/EntityTree.h
index 76d648cf46..fb6e0f26eb 100644
--- a/libraries/entities/src/EntityTree.h
+++ b/libraries/entities/src/EntityTree.h
@@ -88,10 +88,10 @@ public:
     EntityItem* addEntity(const EntityItemID& entityID, const EntityItemProperties& properties);
 
     // use this method if you only know the entityID
-    bool updateEntity(const EntityItemID& entityID, const EntityItemProperties& properties, bool allowLockChange);
+    bool updateEntity(const EntityItemID& entityID, const EntityItemProperties& properties, const SharedNodePointer& senderNode = SharedNodePointer(nullptr));
 
     // use this method if you have a pointer to the entity (avoid an extra entity lookup)
-    bool updateEntity(EntityItem* entity, const EntityItemProperties& properties, bool allowLockChange);
+    bool updateEntity(EntityItem* entity, const EntityItemProperties& properties, const SharedNodePointer& senderNode = SharedNodePointer(nullptr));
 
     void deleteEntity(const EntityItemID& entityID, bool force = false, bool ignoreWarnings = false);
     void deleteEntities(QSet<EntityItemID> entityIDs, bool force = false, bool ignoreWarnings = false);
@@ -180,7 +180,8 @@ private:
 
     void processRemovedEntities(const DeleteEntityOperator& theOperator);
     bool updateEntityWithElement(EntityItem* entity, const EntityItemProperties& properties, 
-                                 EntityTreeElement* containingElement, bool allowLockChange);
+                                 EntityTreeElement* containingElement,
+                                 const SharedNodePointer& senderNode = SharedNodePointer(nullptr));
     static bool findNearPointOperation(OctreeElement* element, void* extraData);
     static bool findInSphereOperation(OctreeElement* element, void* extraData);
     static bool findInCubeOperation(OctreeElement* element, void* extraData);
diff --git a/libraries/entities/src/SimpleEntitySimulation.cpp b/libraries/entities/src/SimpleEntitySimulation.cpp
index 18d5c4ecb0..07c56e7121 100644
--- a/libraries/entities/src/SimpleEntitySimulation.cpp
+++ b/libraries/entities/src/SimpleEntitySimulation.cpp
@@ -32,6 +32,7 @@ void SimpleEntitySimulation::updateEntitiesInternal(const quint64& now) {
             SharedNodePointer ownerNode = nodeList->nodeWithUUID(entity->getSimulatorID());
             if (ownerNode.isNull() || !ownerNode->isAlive()) {
                 qCDebug(entities) << "auto-removing simulation owner" << entity->getSimulatorID();
+                // TODO: zero velocities when we clear simulatorID?
                 entity->setSimulatorID(QUuid());
                 itemItr = _hasSimulationOwnerEntities.erase(itemItr);
             } else {
diff --git a/libraries/physics/src/EntityMotionState.cpp b/libraries/physics/src/EntityMotionState.cpp
index b5d14e4814..3986762f6f 100644
--- a/libraries/physics/src/EntityMotionState.cpp
+++ b/libraries/physics/src/EntityMotionState.cpp
@@ -25,7 +25,7 @@ static const quint8 STEPS_TO_DECIDE_BALLISTIC = 4;
 EntityMotionState::EntityMotionState(btCollisionShape* shape, EntityItem* entity) :
     ObjectMotionState(shape),
     _entity(entity),
-    _sentMoving(false),
+    _sentActive(false),
     _numNonMovingUpdates(0),
     _lastStep(0),
     _serverPosition(0.0f),
@@ -35,8 +35,9 @@ EntityMotionState::EntityMotionState(btCollisionShape* shape, EntityItem* entity
     _serverGravity(0.0f),
     _serverAcceleration(0.0f),
     _accelerationNearlyGravityCount(0),
-    _shouldClaimSimulationOwnership(false),
-    _movingStepsWithoutSimulationOwner(0)
+    _candidateForOwnership(false),
+    _loopsSinceOwnershipBid(0),
+    _loopsWithoutOwner(0)
 {
     _type = MOTION_STATE_TYPE_ENTITY;
     assert(entity != nullptr);
@@ -66,6 +67,28 @@ void EntityMotionState::updateServerPhysicsVariables(uint32_t flags) {
 void EntityMotionState::handleEasyChanges(uint32_t flags) {
     updateServerPhysicsVariables(flags);
     ObjectMotionState::handleEasyChanges(flags);
+    if (flags & EntityItem::DIRTY_SIMULATOR_ID) {
+        _loopsWithoutOwner = 0;
+        _candidateForOwnership = 0;
+        if (_entity->getSimulatorID().isNull()
+                && !_entity->isMoving()
+                && _body->isActive()) {
+            // remove the ACTIVATION flag because this object is coming to rest
+            // according to a remote simulation and we don't want to wake it up again
+            flags &= ~EntityItem::DIRTY_PHYSICS_ACTIVATION;
+            _body->setActivationState(WANTS_DEACTIVATION);
+        } else {
+            auto nodeList = DependencyManager::get<NodeList>();
+            const QUuid& sessionID = nodeList->getSessionUUID();
+            if (_entity->getSimulatorID() != sessionID) {
+                _loopsSinceOwnershipBid = 0;
+            }
+        }
+    }
+    if ((flags & EntityItem::DIRTY_PHYSICS_ACTIVATION) && !_body->isActive()) {
+        _body->activate();
+    }
+
 }
 
 
@@ -95,15 +118,6 @@ bool EntityMotionState::isMoving() const {
     return _entity && _entity->isMoving();
 }
 
-bool EntityMotionState::isMovingVsServer() const {
-    auto alignmentDot = glm::abs(glm::dot(_serverRotation, _entity->getRotation()));
-    if (glm::distance(_serverPosition, _entity->getPosition()) > IGNORE_POSITION_DELTA ||
-        alignmentDot < IGNORE_ALIGNMENT_DOT) {
-        return true;
-    }
-    return false;
-}
-
 // This callback is invoked by the physics simulation in two cases:
 // (1) when the RigidBody is first added to the world
 //     (irregardless of MotionType: STATIC, DYNAMIC, or KINEMATIC)
@@ -143,19 +157,16 @@ void EntityMotionState::setWorldTransform(const btTransform& worldTrans) {
 
     _entity->setLastSimulated(usecTimestampNow());
 
-    // if (_entity->getSimulatorID().isNull() && isMoving()) {
-    if (_entity->getSimulatorID().isNull() && isMovingVsServer()) {
-        // if object is moving and has no owner, attempt to claim simulation ownership.
-        _movingStepsWithoutSimulationOwner++;
+    if (_entity->getSimulatorID().isNull()) {
+        _loopsWithoutOwner++;
+
+        const uint32_t OWNERSHIP_BID_DELAY = 50;
+        if (_loopsWithoutOwner > OWNERSHIP_BID_DELAY) {
+            //qDebug() << "Warning -- claiming something I saw moving." << getName();
+            _candidateForOwnership = true;
+        }
     } else {
-        _movingStepsWithoutSimulationOwner = 0;
-    }
-
-    uint32_t ownershipClaimDelay = 50; // TODO -- how to pick this?  based on meters from our characterController?
-
-    if (_movingStepsWithoutSimulationOwner > ownershipClaimDelay) {
-        //qDebug() << "Warning -- claiming something I saw moving." << getName();
-        setShouldClaimSimulationOwnership(true);
+        _loopsWithoutOwner = 0;
     }
 
     #ifdef WANT_DEBUG
@@ -177,8 +188,11 @@ void EntityMotionState::computeObjectShapeInfo(ShapeInfo& shapeInfo) {
 // we alwasy resend packets for objects that have stopped moving up to some max limit.
 const int MAX_NUM_NON_MOVING_UPDATES = 5;
 
-bool EntityMotionState::doesNotNeedToSendUpdate() const { 
-    return !_body || (_body->isActive() && _numNonMovingUpdates > MAX_NUM_NON_MOVING_UPDATES);
+bool EntityMotionState::isCandidateForOwnership(const QUuid& sessionID) const { 
+    if (!_body || !_entity) {
+        return false;
+    }
+    return _candidateForOwnership || sessionID == _entity->getSimulatorID();
 }
 
 bool EntityMotionState::remoteSimulationOutOfSync(uint32_t simulationStep) {
@@ -191,6 +205,7 @@ bool EntityMotionState::remoteSimulationOutOfSync(uint32_t simulationStep) {
         _serverVelocity = bulletToGLM(_body->getLinearVelocity());
         _serverAngularVelocity = bulletToGLM(_body->getAngularVelocity());
         _lastStep = simulationStep;
+        _sentActive = false;
         return false;
     }
     
@@ -202,21 +217,26 @@ bool EntityMotionState::remoteSimulationOutOfSync(uint32_t simulationStep) {
 
     int numSteps = simulationStep - _lastStep;
     float dt = (float)(numSteps) * PHYSICS_ENGINE_FIXED_SUBSTEP;
-    _lastStep = simulationStep;
-    bool isActive = _body->isActive();
 
+    const float INACTIVE_UPDATE_PERIOD = 0.5f;
+    if (!_sentActive) {
+        // we resend the inactive update every INACTIVE_UPDATE_PERIOD
+        // until it is removed from the outgoing updates 
+        // (which happens when we don't own the simulation and it isn't touching our simulation)
+        return (dt > INACTIVE_UPDATE_PERIOD);
+    }
+
+    bool isActive = _body->isActive();
     if (!isActive) {
-        if (_sentMoving) { 
-            // this object just went inactive so send an update immediately
-            return true;
-        } else {
-            const float NON_MOVING_UPDATE_PERIOD = 1.0f;
-            if (dt > NON_MOVING_UPDATE_PERIOD && _numNonMovingUpdates < MAX_NUM_NON_MOVING_UPDATES) {
-                // RELIABLE_SEND_HACK: since we're not yet using a reliable method for non-moving update packets we repeat these
-                // at a faster rate than the MAX period above, and only send a limited number of them.
-                return true;
-            }
-        }
+        // object has gone inactive but our last send was moving --> send non-moving update immediately
+        return true;
+    }
+
+    _lastStep = simulationStep;
+    if (glm::length2(_serverVelocity) > 0.0f) {
+        _serverVelocity += _serverAcceleration * dt;
+        _serverVelocity *= powf(1.0f - _body->getLinearDamping(), dt);
+        _serverPosition += dt * _serverVelocity;
     }
 
     // Else we measure the error between current and extrapolated transform (according to expected behavior 
@@ -224,15 +244,10 @@ bool EntityMotionState::remoteSimulationOutOfSync(uint32_t simulationStep) {
 
     // NOTE: math is done in the simulation-frame, which is NOT necessarily the same as the world-frame 
     // due to _worldOffset.
+    // TODO: compensate for _worldOffset offset here
 
     // compute position error
-    if (glm::length2(_serverVelocity) > 0.0f) {
-        _serverVelocity += _serverAcceleration * dt;
-        _serverVelocity *= powf(1.0f - _body->getLinearDamping(), dt);
-        _serverPosition += dt * _serverVelocity;
-    }
 
-    // TODO: compensate for simulation offset here
     btTransform worldTrans = _body->getWorldTransform();
     glm::vec3 position = bulletToGLM(worldTrans.getOrigin());
     
@@ -285,42 +300,50 @@ bool EntityMotionState::remoteSimulationOutOfSync(uint32_t simulationStep) {
     return (fabsf(glm::dot(actualRotation, _serverRotation)) < MIN_ROTATION_DOT);
 }
 
-bool EntityMotionState::shouldSendUpdate(uint32_t simulationFrame) {
-    if (!_entity || !remoteSimulationOutOfSync(simulationFrame)) {
+bool EntityMotionState::shouldSendUpdate(uint32_t simulationStep, const QUuid& sessionID) {
+    // NOTE: we expect _entity and _body to be valid in this context, since shouldSendUpdate() is only called 
+    // after doesNotNeedToSendUpdate() returns false and that call should return 'true' if _entity or _body are NULL. 
+    assert(_entity);
+    assert(_body);
+
+    if (!remoteSimulationOutOfSync(simulationStep)) {
+        _candidateForOwnership = false;
         return false;
     }
 
-    if (getShouldClaimSimulationOwnership()) {
+    if (_entity->getSimulatorID() == sessionID) {
+        // we own the simulation
+        _candidateForOwnership = false;
         return true;
     }
 
-    auto nodeList = DependencyManager::get<NodeList>();
-    const QUuid& myNodeID = nodeList->getSessionUUID();
-    const QUuid& simulatorID = _entity->getSimulatorID();
-
-    if (simulatorID != myNodeID) {
-        // some other Node owns the simulating of this, so don't broadcast the results of local simulation.
-        return false;
+    const uint32_t FRAMES_BETWEEN_OWNERSHIP_CLAIMS = 30;
+    if (_candidateForOwnership) {
+        _candidateForOwnership = false;
+        ++_loopsSinceOwnershipBid;
+        if (_loopsSinceOwnershipBid > FRAMES_BETWEEN_OWNERSHIP_CLAIMS) {
+            // we don't own the simulation, but it's time to bid for it
+            _loopsSinceOwnershipBid = 0;
+            return true;
+        }
     }
 
-    return true;
+    _candidateForOwnership = false;
+    return false;
 }
 
-void EntityMotionState::sendUpdate(OctreeEditPacketSender* packetSender, uint32_t step) {
-    if (!_entity || !_entity->isKnownID()) {
-        return; // never update entities that are unknown
-    }
+void EntityMotionState::sendUpdate(OctreeEditPacketSender* packetSender, const QUuid& sessionID, uint32_t step) {
+    assert(_entity);
+    assert(_entity->isKnownID());
 
     bool active = _body->isActive();
     if (!active) {
-        if (_sentMoving) {
-            // make sure all derivatives are zero
-            glm::vec3 zero(0.0f);
-            _entity->setVelocity(zero);
-            _entity->setAngularVelocity(zero);
-            _entity->setAcceleration(zero);
-        }
-
+        // make sure all derivatives are zero
+        glm::vec3 zero(0.0f);
+        _entity->setVelocity(zero);
+        _entity->setAngularVelocity(zero);
+        _entity->setAcceleration(zero);
+        _sentActive = false;
     } else {
         float gravityLength = glm::length(_entity->getGravity());
         float accVsGravity = glm::abs(glm::length(_measuredAcceleration) - gravityLength);
@@ -343,6 +366,21 @@ void EntityMotionState::sendUpdate(OctreeEditPacketSender* packetSender, uint32_
         } else {
             _entity->setAcceleration(glm::vec3(0.0f));
         }
+
+        const float DYNAMIC_LINEAR_VELOCITY_THRESHOLD = 0.05f;  // 5 cm/sec
+        const float DYNAMIC_ANGULAR_VELOCITY_THRESHOLD = 0.087266f;  // ~5 deg/sec
+        bool movingSlowly = glm::length2(_entity->getVelocity()) < (DYNAMIC_LINEAR_VELOCITY_THRESHOLD * DYNAMIC_LINEAR_VELOCITY_THRESHOLD)
+            && glm::length2(_entity->getAngularVelocity()) < (DYNAMIC_ANGULAR_VELOCITY_THRESHOLD * DYNAMIC_ANGULAR_VELOCITY_THRESHOLD)
+            && _entity->getAcceleration() == glm::vec3(0.0f);
+
+        if (movingSlowly) {
+            // velocities might not be zero, but we'll fake them as such, which will hopefully help convince
+            // other simulating observers to deactivate their own copies
+            glm::vec3 zero(0.0f);
+            _entity->setVelocity(zero);
+            _entity->setAngularVelocity(zero);
+        }
+        _sentActive = true;
     }
 
     // remember properties for local server prediction
@@ -352,59 +390,41 @@ void EntityMotionState::sendUpdate(OctreeEditPacketSender* packetSender, uint32_
     _serverAcceleration = _entity->getAcceleration();
     _serverAngularVelocity = _entity->getAngularVelocity();
 
-    _sentMoving = _serverVelocity != glm::vec3(0.0f) || _serverAngularVelocity != glm::vec3(0.0f);
-
     EntityItemProperties properties = _entity->getProperties();
 
-    // explicitly set the properties that changed
+    // explicitly set the properties that changed so that they will be packed
     properties.setPosition(_serverPosition);
     properties.setRotation(_serverRotation);
     properties.setVelocity(_serverVelocity);
     properties.setAcceleration(_serverAcceleration);
     properties.setAngularVelocity(_serverAngularVelocity);
 
-    // RELIABLE_SEND_HACK: count number of updates for entities at rest 
-    // so we can stop sending them after some limit.
-    if (_sentMoving) {
-        _numNonMovingUpdates = 0;
+    // we only update lastEdited when we're sending new physics data 
+    quint64 lastSimulated = _entity->getLastSimulated();
+    _entity->setLastEdited(lastSimulated);
+    properties.setLastEdited(lastSimulated);
+
+    #ifdef WANT_DEBUG
+        quint64 now = usecTimestampNow();
+        qCDebug(physics) << "EntityMotionState::sendUpdate()";
+        qCDebug(physics) << "        EntityItemId:" << _entity->getEntityItemID()
+                         << "---------------------------------------------";
+        qCDebug(physics) << "       lastSimulated:" << debugTime(lastSimulated, now);
+    #endif //def WANT_DEBUG
+
+    if (sessionID == _entity->getSimulatorID()) {
+        // we think we own the simulation
+        if (!active) {
+            // we own the simulation but the entity has stopped, so we tell the server that we're clearing simulatorID
+            // but we remember that we do still own it...  and rely on the server to tell us that we don't
+            properties.setSimulatorID(QUuid());
+        } else {
+            // explicitly set the property's simulatorID so that it is flagged as changed and will be packed
+            properties.setSimulatorID(sessionID);
+        }
     } else {
-        _numNonMovingUpdates++;
-    }
-    if (_numNonMovingUpdates <= 1) {
-        // we only update lastEdited when we're sending new physics data 
-        quint64 lastSimulated = _entity->getLastSimulated();
-        _entity->setLastEdited(lastSimulated);
-        properties.setLastEdited(lastSimulated);
-
-        #ifdef WANT_DEBUG
-            quint64 now = usecTimestampNow();
-            qCDebug(physics) << "EntityMotionState::sendUpdate()";
-            qCDebug(physics) << "        EntityItemId:" << _entity->getEntityItemID()
-                             << "---------------------------------------------";
-            qCDebug(physics) << "       lastSimulated:" << debugTime(lastSimulated, now);
-        #endif //def WANT_DEBUG
-
-    } else {
-        properties.setLastEdited(_entity->getLastEdited());
-    }
-
-    auto nodeList = DependencyManager::get<NodeList>();
-    QUuid myNodeID = nodeList->getSessionUUID();
-    QUuid simulatorID = _entity->getSimulatorID();
-
-    if (getShouldClaimSimulationOwnership()) {
-        // we think we should own it, so we tell the server that we do, 
-        // but we don't remember that we own it...
-        // instead we expect the sever to tell us later whose ownership it has accepted
-        properties.setSimulatorID(myNodeID);
-        setShouldClaimSimulationOwnership(false);
-    } else if (simulatorID == myNodeID 
-            && !_sentMoving 
-            && _numNonMovingUpdates == MAX_NUM_NON_MOVING_UPDATES) {
-        // we own it, the entity has stopped, and we're sending the last non-moving update
-        // --> give up ownership
-        _entity->setSimulatorID(QUuid());
-        properties.setSimulatorID(QUuid());
+        // we don't own the simulation for this entity yet, but we're sending a bid for it
+        properties.setSimulatorID(sessionID);
     }
 
     if (EntityItem::getSendPhysicsUpdates()) {
@@ -453,7 +473,7 @@ QUuid EntityMotionState::getSimulatorID() const {
 
 // virtual
 void EntityMotionState::bump() {
-    setShouldClaimSimulationOwnership(true);
+    _candidateForOwnership = true;
 }
 
 void EntityMotionState::resetMeasuredBodyAcceleration() {
diff --git a/libraries/physics/src/EntityMotionState.h b/libraries/physics/src/EntityMotionState.h
index 6028662aa0..83b89a5a29 100644
--- a/libraries/physics/src/EntityMotionState.h
+++ b/libraries/physics/src/EntityMotionState.h
@@ -36,7 +36,6 @@ public:
     virtual MotionType computeObjectMotionType() const;
 
     virtual bool isMoving() const;
-    virtual bool isMovingVsServer() const;
 
     // this relays incoming position/rotation to the RigidBody
     virtual void getWorldTransform(btTransform& worldTrans) const;
@@ -46,13 +45,10 @@ public:
 
     virtual void computeObjectShapeInfo(ShapeInfo& shapeInfo);
 
-    bool doesNotNeedToSendUpdate() const;
+    bool isCandidateForOwnership(const QUuid& sessionID) const;
     bool remoteSimulationOutOfSync(uint32_t simulationStep);
-    bool shouldSendUpdate(uint32_t simulationFrame);
-    void sendUpdate(OctreeEditPacketSender* packetSender, uint32_t step);
-
-    void setShouldClaimSimulationOwnership(bool value) { _shouldClaimSimulationOwnership = value; }
-    bool getShouldClaimSimulationOwnership() { return _shouldClaimSimulationOwnership; }
+    bool shouldSendUpdate(uint32_t simulationStep, const QUuid& sessionID);
+    void sendUpdate(OctreeEditPacketSender* packetSender, const QUuid& sessionID, uint32_t step);
 
     virtual uint32_t getAndClearIncomingDirtyFlags() const;
 
@@ -92,7 +88,7 @@ protected:
 
     EntityItem* _entity;
 
-    bool _sentMoving;   // true if last update was moving
+    bool _sentActive;   // true if body was active when we sent last update
     int _numNonMovingUpdates; // RELIABLE_SEND_HACK for "not so reliable" resends of packets for non-moving objects
 
     // these are for the prediction of the remote server's simple extrapolation
@@ -109,8 +105,9 @@ protected:
     glm::vec3 _measuredAcceleration;
 
     quint8 _accelerationNearlyGravityCount;
-    bool _shouldClaimSimulationOwnership;
-    quint32 _movingStepsWithoutSimulationOwner;
+    bool _candidateForOwnership;
+    uint32_t _loopsSinceOwnershipBid;
+    uint32_t _loopsWithoutOwner;
 };
 
 #endif // hifi_EntityMotionState_h
diff --git a/libraries/physics/src/ObjectMotionState.cpp b/libraries/physics/src/ObjectMotionState.cpp
index c1258ad6bc..c5288cfa76 100644
--- a/libraries/physics/src/ObjectMotionState.cpp
+++ b/libraries/physics/src/ObjectMotionState.cpp
@@ -146,10 +146,6 @@ void ObjectMotionState::handleEasyChanges(uint32_t flags) {
         _body->setMassProps(mass, inertia);
         _body->updateInertiaTensor();
     }
-
-    if (flags & EntityItem::DIRTY_PHYSICS_ACTIVATION) {
-        _body->activate();
-    }
 }
 
 void ObjectMotionState::handleHardAndEasyChanges(uint32_t flags, PhysicsEngine* engine) {
diff --git a/libraries/physics/src/ObjectMotionState.h b/libraries/physics/src/ObjectMotionState.h
index 1407be0d20..bfc9310ec6 100644
--- a/libraries/physics/src/ObjectMotionState.h
+++ b/libraries/physics/src/ObjectMotionState.h
@@ -36,11 +36,11 @@ enum MotionStateType {
 // and re-added to the physics engine and "easy" which just updates the body properties.
 const uint32_t HARD_DIRTY_PHYSICS_FLAGS = (uint32_t)(EntityItem::DIRTY_MOTION_TYPE | EntityItem::DIRTY_SHAPE);
 const uint32_t EASY_DIRTY_PHYSICS_FLAGS = (uint32_t)(EntityItem::DIRTY_TRANSFORM | EntityItem::DIRTY_VELOCITIES |
-                                                     EntityItem::DIRTY_MASS | EntityItem::DIRTY_COLLISION_GROUP |
-                                                     EntityItem::DIRTY_MATERIAL | EntityItem::DIRTY_PHYSICS_ACTIVATION);
+                                                     EntityItem::DIRTY_MASS | EntityItem::DIRTY_COLLISION_GROUP);
 
 // These are the set of incoming flags that the PhysicsEngine needs to hear about:
-const uint32_t DIRTY_PHYSICS_FLAGS = HARD_DIRTY_PHYSICS_FLAGS | EASY_DIRTY_PHYSICS_FLAGS;
+const uint32_t DIRTY_PHYSICS_FLAGS = HARD_DIRTY_PHYSICS_FLAGS | EASY_DIRTY_PHYSICS_FLAGS |
+                                     EntityItem::DIRTY_MATERIAL | (uint32_t)EntityItem::DIRTY_PHYSICS_ACTIVATION;
 
 // These are the outgoing flags that the PhysicsEngine can affect:
 const uint32_t OUTGOING_DIRTY_PHYSICS_FLAGS = EntityItem::DIRTY_TRANSFORM | EntityItem::DIRTY_VELOCITIES;
diff --git a/libraries/physics/src/PhysicalEntitySimulation.cpp b/libraries/physics/src/PhysicalEntitySimulation.cpp
index 50e81b4788..3e43ab7454 100644
--- a/libraries/physics/src/PhysicalEntitySimulation.cpp
+++ b/libraries/physics/src/PhysicalEntitySimulation.cpp
@@ -188,7 +188,7 @@ VectorOfMotionStates& PhysicalEntitySimulation::getObjectsToChange() {
     return _tempVector;
 }
 
-void PhysicalEntitySimulation::handleOutgoingChanges(VectorOfMotionStates& motionStates) {
+void PhysicalEntitySimulation::handleOutgoingChanges(VectorOfMotionStates& motionStates, const QUuid& sessionID) {
     // walk the motionStates looking for those that correspond to entities
     for (auto stateItr : motionStates) {
         ObjectMotionState* state = &(*stateItr);
@@ -196,24 +196,32 @@ void PhysicalEntitySimulation::handleOutgoingChanges(VectorOfMotionStates& motio
             EntityMotionState* entityState = static_cast<EntityMotionState*>(state);
             EntityItem* entity = entityState->getEntity();
             if (entity) {
-                _outgoingChanges.insert(entityState);
+                if (entity->isKnownID() && entityState->isCandidateForOwnership(sessionID)) {
+                    _outgoingChanges.insert(entityState);
+                }
                 _entitiesToSort.insert(entityState->getEntity());
             }
         }
     }
 
-    // send outgoing packets
     uint32_t numSubsteps = _physicsEngine->getNumSubsteps();
     if (_lastStepSendPackets != numSubsteps) {
         _lastStepSendPackets = numSubsteps;
 
+        if (sessionID.isNull()) {
+            // usually don't get here, but if so --> nothing to do
+            _outgoingChanges.clear();
+            return;
+        }
+
+        // send outgoing packets
         QSet<EntityMotionState*>::iterator stateItr = _outgoingChanges.begin();
         while (stateItr != _outgoingChanges.end()) {
             EntityMotionState* state = *stateItr;
-            if (state->doesNotNeedToSendUpdate()) {
+            if (!state->isCandidateForOwnership(sessionID)) {
                 stateItr = _outgoingChanges.erase(stateItr);
-            } else if (state->shouldSendUpdate(numSubsteps)) {
-                state->sendUpdate(_entityPacketSender, numSubsteps);
+            } else if (state->shouldSendUpdate(numSubsteps, sessionID)) {
+                state->sendUpdate(_entityPacketSender, sessionID, numSubsteps);
                 ++stateItr;
             } else {
                 ++stateItr;
diff --git a/libraries/physics/src/PhysicalEntitySimulation.h b/libraries/physics/src/PhysicalEntitySimulation.h
index 4fd54c60fb..b3ee7af1e1 100644
--- a/libraries/physics/src/PhysicalEntitySimulation.h
+++ b/libraries/physics/src/PhysicalEntitySimulation.h
@@ -48,7 +48,7 @@ public:
     VectorOfMotionStates& getObjectsToAdd();
     VectorOfMotionStates& getObjectsToChange();
 
-    void handleOutgoingChanges(VectorOfMotionStates& motionStates);
+    void handleOutgoingChanges(VectorOfMotionStates& motionStates, const QUuid& sessionID);
     void handleCollisionEvents(CollisionEvents& collisionEvents);
 
 private:
diff --git a/libraries/physics/src/PhysicsEngine.h b/libraries/physics/src/PhysicsEngine.h
index 8b947d2510..d1dc5bcd79 100644
--- a/libraries/physics/src/PhysicsEngine.h
+++ b/libraries/physics/src/PhysicsEngine.h
@@ -53,6 +53,7 @@ public:
     void init();
 
     void setSessionUUID(const QUuid& sessionID) { _sessionID = sessionID; }
+    const QUuid& getSessionID() const { return _sessionID; }
 
     void addObject(ObjectMotionState* motionState);
     void removeObject(ObjectMotionState* motionState);
diff --git a/tests/octree/src/ModelTests.cpp b/tests/octree/src/ModelTests.cpp
index e4309100af..2e2b873115 100644
--- a/tests/octree/src/ModelTests.cpp
+++ b/tests/octree/src/ModelTests.cpp
@@ -103,7 +103,7 @@ void EntityTests::entityTreeTests(bool verbose) {
 
         properties.setPosition(newPosition);
 
-        tree.updateEntity(entityID, properties, true);
+        tree.updateEntity(entityID, properties);
         
         float targetRadius = oneMeter * 2.0f;
         const EntityItem* foundEntityByRadius = tree.findClosestEntity(positionNearOrigin, targetRadius);
@@ -143,7 +143,7 @@ void EntityTests::entityTreeTests(bool verbose) {
 
         properties.setPosition(newPosition);
 
-        tree.updateEntity(entityID, properties, true);
+        tree.updateEntity(entityID, properties);
         
         float targetRadius = oneMeter * 2.0f;
         const EntityItem* foundEntityByRadius = tree.findClosestEntity(positionAtCenter, targetRadius);