The way we deal with free domains is.
1) These are registered in our name and in our account.
2) If the clients wants to move hosts the options we give them are i) Pay the full price of the domain and we then change registrant details to their name etc. and place it in a domain account in their name. ii) We agree to change the nameservers for a fee and the domain remains in our name. iii) The give up the domain and we try and sell it .