diff --git a/devs.md b/devs.md
index d994d5e..bb74a1c 100644
--- a/devs.md
+++ b/devs.md
@@ -148,6 +148,20 @@ Hence, the new feature should be implemented as follows:
 - **Service Hub** (`src/modules/services/`): Central service registry using dependency injection
 - **Common Library** (`src/lib/`): Platform-independent sync logic, shared with other tools
 
+### Conflict Merge Policy
+
+Markdown conflict auto-merge should behave like a conservative three-way merge. The guiding rule is to merge changes when they touch non-overlapping regions, and to keep a manual conflict when the edits overlap semantically.
+
+When in doubt, prefer the safer outcome: preserve data, keep the conflict visible, and ask the user rather than silently discarding content or choosing one side.
+
+- If one side deletes a line and the other side leaves that same line unchanged, treat it as a safe deletion. The deleted line must not be reintroduced into the merged result.
+- If one side inserts new content in a different region while the other side deletes an unchanged old region, preserve the insertion and the deletion.
+- If one side deletes a line and the other side modifies that same line, keep the conflict for user resolution.
+- If both sides insert different content at the same position, keep both insertions in a deterministic order unless the surrounding deletion context indicates that they are competing replacements.
+- Avoid resolving conflicts by simply choosing the newest revision unless the user has explicitly selected that behaviour.
+
+This policy is intentionally aligned with the conflict checkboxes and compatibility settings: automatic merge should remove avoidable prompts, but it must not silently choose between overlapping user intentions.
+
 ### File Structure Conventions
 
 - **Platform-specific code**: Use `.platform.ts` suffix (replaced with `.obsidian.ts` in production builds via esbuild)
diff --git a/src/lib b/src/lib
index cbe333d..a0efb72 160000
--- a/src/lib
+++ b/src/lib
@@ -1 +1 @@
-Subproject commit cbe333da24ff904a929322cb5dc267b7f05e0d1f
+Subproject commit a0efb7274e15c4ae0f0e0740670a1ad2699031e9
diff --git a/updates.md b/updates.md
index b675f14..959cf08 100644
--- a/updates.md
+++ b/updates.md
@@ -7,6 +7,13 @@ The head note of 0.25 is now in [updates_old.md](https://github.com/vrtmrz/obsid
 
 ### Fixed
 
+- Improved Markdown conflict auto-merge so that non-overlapping edits are merged while overlapping delete-and-edit cases remain visible for manual resolution (#993).
+  - Behaviour change:
+    - When one side deletes an unchanged line and the other side edits a different region, the deleted line is no longer reintroduced into the merged result.
+    - When one side deletes a line and the other side modifies that same line, the conflict is preserved instead of silently choosing one side.
+- Fixed an issue where applying a newer database entry to storage could incorrectly preserve an older local file as a conflict (#994).
+  - Behaviour change:
+    - Local storage is preserved as a conflict when it may contain unsynchronised changes that are not represented in the revision history. A newer incoming text entry is applied without creating a conflict only when it clearly extends the existing local text.
 - Fixed an issue where choosing Disable and then Overwrite in Hidden File Sync could silently skip hidden files, because the overwrite setup ran while hidden file synchronisation was still disabled (#989, PR #992).
   - Hidden File Sync is now re-enabled before the Fetch, Overwrite, or Merge initialisation runs, instead of after it completes. If that initialisation fails, the setting may remain enabled.