diff --git a/scarf/Packages/ScarfCore/Sources/ScarfCore/Models/ServerContext.swift b/scarf/Packages/ScarfCore/Sources/ScarfCore/Models/ServerContext.swift
index 31c68de..ae6e0f2 100644
--- a/scarf/Packages/ScarfCore/Sources/ScarfCore/Models/ServerContext.swift
+++ b/scarf/Packages/ScarfCore/Sources/ScarfCore/Models/ServerContext.swift
@@ -233,10 +233,34 @@ extension ServerContext {
 /// the remote path doesn't exist on this Mac.
 extension ServerContext {
     /// Read a UTF-8 text file. `nil` on any error (missing, transport down,
-    /// invalid encoding).
+    /// invalid encoding). Use this when the caller genuinely can't tell
+    /// the difference (e.g. "if a manifest exists, parse it, otherwise
+    /// use defaults"). Prefer `readTextThrowing` when the UI needs to
+    /// distinguish "file doesn't exist" from "transport failed" — pass-1
+    /// M7 #8 showed that silent nils from transport errors masqueraded
+    /// as empty files in the Memory editor for ~1 minute before the
+    /// SFTP-tilde fix was found.
     public nonisolated func readText(_ path: String) -> String? {
-        guard let data = try? makeTransport().readFile(path) else { return nil }
-        return String(data: data, encoding: .utf8)
+        try? readTextThrowing(path)
+    }
+
+    /// Read a UTF-8 text file. Throws on transport errors. Returns:
+    /// - `.some(content)` when the file was read successfully,
+    /// - `.none` when the file is genuinely absent (the transport's
+    ///   `fileExists` returned false),
+    /// - throws the underlying transport error otherwise.
+    ///
+    /// This is the version to call from VMs that can surface a real
+    /// error to the UI — e.g. Memory, Settings, Cron. The nil-returning
+    /// shim above is fine for "probably there, probably not" cases.
+    public nonisolated func readTextThrowing(_ path: String) throws -> String? {
+        let transport = makeTransport()
+        guard transport.fileExists(path) else { return nil }
+        let data = try transport.readFile(path)
+        guard let text = String(data: data, encoding: .utf8) else {
+            throw TransportError.other(message: "File at \(path) is not valid UTF-8.")
+        }
+        return text
     }
 
     /// Read raw bytes. `nil` on any error.
diff --git a/scarf/Packages/ScarfCore/Sources/ScarfCore/ViewModels/IOSMemoryViewModel.swift b/scarf/Packages/ScarfCore/Sources/ScarfCore/ViewModels/IOSMemoryViewModel.swift
index 7c86372..da45e2f 100644
--- a/scarf/Packages/ScarfCore/Sources/ScarfCore/ViewModels/IOSMemoryViewModel.swift
+++ b/scarf/Packages/ScarfCore/Sources/ScarfCore/ViewModels/IOSMemoryViewModel.swift
@@ -93,24 +93,39 @@ public final class IOSMemoryViewModel {
     public func load() async {
         isLoading = true
         lastError = nil
-        // Run the file read on a detached task — `ServerContext.readText`
+        // Run the file read on a detached task — `readTextThrowing`
         // blocks on transport I/O, and we don't want the MainActor
         // hanging during a remote SFTP fetch.
         let ctx = context
         let path = kind.path(on: context)
-        let loaded: String? = await Task.detached {
-            ctx.readText(path)
+        let result: Result<String?, Error> = await Task.detached {
+            do {
+                return .success(try ctx.readTextThrowing(path))
+            } catch {
+                return .failure(error)
+            }
         }.value
 
-        if let loaded {
+        switch result {
+        case .success(.some(let loaded)):
             text = loaded
             originalText = loaded
-        } else {
-            // `readText` returns nil on missing file — treat as
-            // empty (the user is creating the file for the first
-            // time) rather than an error.
+            lastError = nil
+        case .success(.none):
+            // Genuinely absent file — treat as empty (first-time
+            // create). Distinguished from transport error by the
+            // fileExists check inside readTextThrowing (pass-1 M7 #7/#8).
             text = ""
             originalText = ""
+            lastError = nil
+        case .failure(let error):
+            // Transport error (SSH timeout, auth failure, SFTP
+            // protocol issue). Surface to the UI so the user
+            // understands this isn't just "empty file" — something's
+            // genuinely broken with the connection.
+            text = ""
+            originalText = ""
+            lastError = "Couldn't load \(kind.displayName) — \(error.localizedDescription)"
         }
         isLoading = false
     }
diff --git a/scarf/Packages/ScarfCore/Tests/ScarfCoreTests/M0dViewModelsTests.swift b/scarf/Packages/ScarfCore/Tests/ScarfCoreTests/M0dViewModelsTests.swift
index 4be1ee9..d6ec9ee 100644
--- a/scarf/Packages/ScarfCore/Tests/ScarfCoreTests/M0dViewModelsTests.swift
+++ b/scarf/Packages/ScarfCore/Tests/ScarfCoreTests/M0dViewModelsTests.swift
@@ -123,7 +123,7 @@ import Foundation
     @Test @MainActor func activityViewModelInits() {
         let vm = ActivityViewModel(context: .local)
         #expect(vm.context.id == ServerContext.local.id)
-        #expect(vm.entries.isEmpty)
+        #expect(vm.toolMessages.isEmpty)
     }
 
     @Test @MainActor func insightsViewModelInits() {