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Allodial title is a concept in some systems of property law. It describes a situation where real property (land, buildings and fixtures) is owned free and clear of any encumbrances, including liens, mortgages and tax obligations. Allodial title is inalienable, in that it cannot be taken by any operation of law for any reason whatsoever.
In common legal use, allodial title is used to distinguish absolute ownership of land by individuals from feudal ownership, where property ownership is dependent on relationship to a lord or the sovereign. Webster's first dictionary (1825 ed) says allodium is "land which is absolute property of the owner, real estate held in absolute independence, without being subject to any rent, service, or acknowledgement to a superior. It is thus opposed to feud."
True allodial title is rare, with most property ownership in the common law world—primarily, the United Kingdom, the United States, Canada, Australia, New Zealand and the Republic of Ireland—described more properly as being in fee simple. In particular, land is said to be "held of the Crown" in England and Wales and the Commonwealth realms. In England, there is no allodial land, all land being held of the Crown; even in the United States most lands are not allodial, as evidenced by the existence of property taxes. Some of the Commonwealth realms (particularly Australia) recognise native title, a form of allodial title that does not originate from a Crown grant.
In France, while allodial title existed before the French Revolution, it was rare and limited to ecclesiastical properties and property that had fallen out of feudal ownership. After the French Revolution allodial title became the norm in France and other civil law countries that were under Napoleonic legal influences. Interestingly Quebec adopted a form of allodial title when it abolished feudalism in the mid-nineteenth century making the forms of ownership in Upper and Lower Canada remarkably similar in substance.
Property owned under allodial title is referred to as allodial land, allodium, or an allod.
Allodial lands are the absolute property of their owner and not subject to any service or acknowledgment to a superior. An allodial title is the opposite of a feudal tenure such as fee simple. The derivation of the word is still doubtful, though it is probably compounded of the Germanic all, whole or entire, and odh, property. Allodial tenure seems to have been common throughout northern Europe, but is now unknown in common law jurisidictions apart from the United States. Allodial titles are known as udal tenure in Orkney and Shetland, the only parts of the United Kingdom of Great Britain and Northern Ireland where they exist.
As late as the Tudor period, in order to avoid estate taxes, a legal loophole was exploited where land was willed to a trustee for the use of the beneficiary. However, trustees often abused this privilege, and heirs found that the courts of common law would refuse to recognize the "use" clause, and would instead grant title in law to the trustee. However, the courts of equity, which were developed by the sovereign to deal with obvious injustices in the common law courts, ruled that the heirs were entitled to the use of the property, and gave them title in equity. As rulings of equity courts ranked above those of common law courts, this gave heirs the use of the land, but not title to it in the common law.
However, this distinction between common law and equity title helped develop forms of security based on the distinction, now known as the mortgage. Enjoyment of the property during the period where the mortgage was in good standing could be assured through the equity courts, while the right to foreclose on the property to merge the common law and equity title were guaranteed in the common law courts.