diff --git a/controllers/vspheredeploymentzone_controller.go b/controllers/vspheredeploymentzone_controller.go
index 14be19e5e7..93d67e910d 100644
--- a/controllers/vspheredeploymentzone_controller.go
+++ b/controllers/vspheredeploymentzone_controller.go
@@ -185,21 +185,18 @@ func (r vsphereDeploymentZoneReconciler) reconcileNormal(deploymentZoneCtx *capv
 	conditions.MarkTrue(deploymentZoneCtx.VSphereDeploymentZone, infrav1.VSphereFailureDomainValidatedCondition)
 
 	// Ensure the VSphereDeploymentZone is marked as an owner of the VSphereFailureDomain.
-	if !clusterutilv1.HasOwnerRef(deploymentZoneCtx.VSphereFailureDomain.GetOwnerReferences(), metav1.OwnerReference{
-		APIVersion: infrav1.GroupVersion.String(),
-		Kind:       "VSphereDeploymentZone",
-		Name:       deploymentZoneCtx.VSphereDeploymentZone.Name,
-	}) {
-		if err := updateOwnerReferences(deploymentZoneCtx, deploymentZoneCtx.VSphereFailureDomain, r.Client, func() []metav1.OwnerReference {
-			return append(deploymentZoneCtx.VSphereFailureDomain.OwnerReferences, metav1.OwnerReference{
-				APIVersion: infrav1.GroupVersion.String(),
-				Kind:       deploymentZoneCtx.VSphereDeploymentZone.Kind,
-				Name:       deploymentZoneCtx.VSphereDeploymentZone.Name,
-				UID:        deploymentZoneCtx.VSphereDeploymentZone.UID,
-			})
+	if err := updateOwnerReferences(deploymentZoneCtx, deploymentZoneCtx.VSphereFailureDomain, r.Client,
+		func() []metav1.OwnerReference {
+			return clusterutilv1.EnsureOwnerRef(
+				deploymentZoneCtx.VSphereFailureDomain.OwnerReferences,
+				metav1.OwnerReference{
+					APIVersion: infrav1.GroupVersion.String(),
+					Kind:       deploymentZoneCtx.VSphereDeploymentZone.Kind,
+					Name:       deploymentZoneCtx.VSphereDeploymentZone.Name,
+					UID:        deploymentZoneCtx.VSphereDeploymentZone.UID,
+				})
 		}); err != nil {
-			return err
-		}
+		return err
 	}
 
 	deploymentZoneCtx.VSphereDeploymentZone.Status.Ready = pointer.Bool(true)
diff --git a/controllers/vspheremachine_controller.go b/controllers/vspheremachine_controller.go
index 7d15151f60..9edc24518c 100644
--- a/controllers/vspheremachine_controller.go
+++ b/controllers/vspheremachine_controller.go
@@ -263,7 +263,7 @@ func (r *machineReconciler) Reconcile(_ context.Context, req ctrl.Request) (_ ct
 }
 
 func (r *machineReconciler) reconcileDelete(machineCtx capvcontext.MachineContext) (reconcile.Result, error) {
-	machineCtx.GetLogger().Info("Handling deleted SphereMachine")
+	machineCtx.GetLogger().Info("Handling deleted VSphereMachine")
 	conditions.MarkFalse(machineCtx.GetVSphereMachine(), infrav1.VMProvisionedCondition, clusterv1.DeletingReason, clusterv1.ConditionSeverityInfo, "")
 
 	if err := r.VMService.ReconcileDelete(machineCtx); err != nil {
diff --git a/test/e2e/data/infrastructure-vsphere/main/failuredomains/drop-existing-secret.yaml b/test/e2e/data/infrastructure-vsphere/main/failuredomains/drop-existing-identity-secret.yaml
similarity index 100%
rename from test/e2e/data/infrastructure-vsphere/main/failuredomains/drop-existing-secret.yaml
rename to test/e2e/data/infrastructure-vsphere/main/failuredomains/drop-existing-identity-secret.yaml
diff --git a/test/e2e/data/infrastructure-vsphere/main/failuredomains/failure-domains.yaml b/test/e2e/data/infrastructure-vsphere/main/failuredomains/failure-domains.yaml
new file mode 100644
index 0000000000..7a65dc0fde
--- /dev/null
+++ b/test/e2e/data/infrastructure-vsphere/main/failuredomains/failure-domains.yaml
@@ -0,0 +1,33 @@
+---
+apiVersion: infrastructure.cluster.x-k8s.io/v1beta1
+kind: VSphereFailureDomain
+metadata:
+  name: "fd1"
+  namespace: "${NAMESPACE}"
+spec:
+  region:
+    name: '${VSPHERE_DATACENTER}'
+    type: Datacenter
+    tagCategory: k8s-region
+    autoConfigure: true
+  zone:
+    name: "cluster0"
+    type: ComputeCluster
+    tagCategory: k8s-zone
+    autoConfigure: true
+  topology:
+    datacenter: '${VSPHERE_DATACENTER}'
+    # datastore is optional and should\can be set when only one compute cluster is set
+    # or we should use storage policy
+    computeCluster: "cluster0"
+---
+apiVersion: infrastructure.cluster.x-k8s.io/v1beta1
+kind: VSphereDeploymentZone
+metadata:
+  name: "zone1"
+  namespace: "${NAMESPACE}"
+spec:
+  server: '${VSPHERE_SERVER}'
+  failureDomain: "fd1"
+  placementConstraint:
+    resourcePool: '${VSPHERE_RESOURCE_POOL}'
\ No newline at end of file
diff --git a/test/e2e/data/infrastructure-vsphere/main/failuredomains/kustomization.yaml b/test/e2e/data/infrastructure-vsphere/main/failuredomains/kustomization.yaml
index fe657a92ac..c05d7d011f 100644
--- a/test/e2e/data/infrastructure-vsphere/main/failuredomains/kustomization.yaml
+++ b/test/e2e/data/infrastructure-vsphere/main/failuredomains/kustomization.yaml
@@ -3,10 +3,10 @@ kind: Kustomization
 resources:
   - ../base
   - cluster-identity.yaml
+  - failure-domains.yaml
 patchesStrategicMerge:
   - ../commons/cluster-resource-set-label.yaml
   - ../commons/cluster-network-CIDR.yaml
   - ../commons/cluster-resource-set-csi-insecure.yaml
   - vsphereclusteridentity.yaml
-  - drop-existing-secret.yaml
-#  - ../commons/failure-domain.yaml
+  - drop-existing-identity-secret.yaml
diff --git a/test/e2e/owner_reference_test.go b/test/e2e/ownerreference_test.go
similarity index 90%
rename from test/e2e/owner_reference_test.go
rename to test/e2e/ownerreference_test.go
index 6510041f97..9e43fd2b3f 100644
--- a/test/e2e/owner_reference_test.go
+++ b/test/e2e/ownerreference_test.go
@@ -128,15 +128,22 @@ var (
 		"VSphereClusterIdentity": func(owners []metav1.OwnerReference) error {
 			return framework.HasExactOwners(owners)
 		},
-		"VSphereFailureDomain":  func(owners []metav1.OwnerReference) error { panic("IMPLEMENT ME") },
-		"vSphereDeploymentZone": func(owners []metav1.OwnerReference) error { panic("IMPLEMENT ME") },
+		"VSphereDeploymentZone": func(owners []metav1.OwnerReference) error {
+			// The vSphereDeploymentZone does not have any owners.
+			return framework.HasExactOwners(owners)
+		},
+		"VSphereFailureDomain": func(owners []metav1.OwnerReference) error {
+			// The vSphereFailureDomain can be owned by one or more vSphereDeploymentZones.
+			return framework.HasOneOfExactOwners(owners, []metav1.OwnerReference{vSphereDeploymentZoneOwner}, []metav1.OwnerReference{vSphereDeploymentZoneOwner, vSphereDeploymentZoneOwner})
+		},
 	}
 )
 
 var (
 	// CAPV owners.
-	vSphereMachineOwner = metav1.OwnerReference{Kind: "VSphereMachine", APIVersion: infrav1.GroupVersion.String()}
-	vSphereClusterOwner = metav1.OwnerReference{Kind: "VSphereCluster", APIVersion: infrav1.GroupVersion.String()}
+	vSphereMachineOwner        = metav1.OwnerReference{Kind: "VSphereMachine", APIVersion: infrav1.GroupVersion.String()}
+	vSphereClusterOwner        = metav1.OwnerReference{Kind: "VSphereCluster", APIVersion: infrav1.GroupVersion.String()}
+	vSphereDeploymentZoneOwner = metav1.OwnerReference{Kind: "VSphereDeploymentZone", APIVersion: infrav1.GroupVersion.String()}
 
 	// CAPI owners.
 	clusterClassOwner       = metav1.OwnerReference{Kind: "ClusterClass", APIVersion: clusterv1.GroupVersion.String()}