Also known as: unity of interests · joint tenancy unity
Written by attorneys · grounded in primary & secondary sources — see below
2 senses
A condition in which a corporation and its controlling shareholder exhibit such complete overlap in ownership and control that their separate legal personalities no longer exist. Courts assess this condition through factors including commingling of funds, failure to observe corporate formalities, undercapitalization, and treatment of corporate assets as personal property.
A condition in which a corporation and its controlling shareholder exhibit such complete overlap in ownership and control that their separate legal personalities no longer exist. Courts assess this condition through factors including commingling of funds, failure to observe corporate formalities, undercapitalization, and treatment of corporate assets as personal property.
Select any source to read its text and confirm it supports the definition.
One of the four unities required at common law to create and maintain a joint tenancy. It exists when all joint tenants hold interests that are identical in nature, extent, and duration.
Select any source to read its text and confirm it supports the definition.
One of the four unities required at common law to create and maintain a joint tenancy. It exists when all joint tenants hold interests that are identical in nature, extent, and duration.
Each sense below has its own examples, sources, and questions.
Ulysses formed Ulysses Maritime solely to operate a single vessel. He deposited all charter payments into his personal account, paid the company's fuel bills from the same account, issued no stock, and kept no corporate minutes. When a supplier obtained a judgment against the corporation that the entity could not pay, the court found the required unity of interest and allowed the supplier to reach Ulysses's personal assets.
Uriel created Unity Capital with minimal funds and no separate bank account. He used the entity to sign management contracts but immediately routed all revenue to his personal LLC. After Unity Capital failed to pay a contractor, the court determined that the unity of interest existed because the corporation functioned only as Uriel's instrumentality and that respecting its separate form would promote injustice.
Courts examine whether the corporation and shareholder commingled funds, failed to maintain corporate formalities, operated with inadequate capitalization, or treated corporate assets as the owner's personal property. Any of these facts can support a finding that the separate personalities of the corporation and shareholder no longer exist.
Supporting sources
No. The plaintiff must also show that respecting the corporate form would sanction fraud or promote injustice. Unity of interest satisfies only the first prong of the two-part test.
Supporting sources
Ursula conveyed an undivided one-third interest in Blackacre to Uri and an undivided two-thirds interest to Uriel in the same deed. Because the grantees received interests of different sizes, the unity of interest was absent. The court held that Uri and Uriel held the property only as tenants in common.
Uma and Uriel each received an undivided one-half interest in Greenacre under the same deed at the same moment. Because their interests were identical in size and duration, the unity of interest was satisfied. The court recognized a valid joint tenancy with right of survivorship.
Unity of interest requires that each joint tenant hold an interest identical in nature, extent, and duration. Unity of time requires simultaneous vesting, unity of title requires acquisition from the same instrument, and unity of possession requires equal rights to the whole property.
Supporting sources
The conveyance creates only a tenancy in common. Joint tenancy requires all four unities. The absence of any one prevents the right of survivorship from arising.
Supporting sources
…of joint interests, does not abrogate the common law rule that four unities are essential to an estate in joint tenancy: unity of interest, unity of time, unity of title, and unity of possession. (See Hammond v. McArthur (1947) 30 Cal.2d 512, 514 [183 P.2d 1]; McDonald v. Morley (1940) 15 Cal.2d 409, 412 [101 P.2d 690, 129…