In property law, an allodial title describes a situation where you own land, fixtures, buildings or any other real property without a cost. Additionally, an allodial title does not have any encumbrances or financial burdens such as mortgages, tax obligations or liens. An allodial title results from inalienable or natural rights not rights obtained through laws.
An allodial title is an absolute property of its owner. However, a property subject to an allodial title is also inalienable and, therefore, not subject to any law and authority. An operation of law does not have legal authority to take an allodial title. Further, according to “Principles of Real Estate,” an allodial title represents the opposite of a feudal tenure, the more common form of property ownership that includes fee simple ownership.
Historically, allodial titles were fairly common throughout northern Europe. However, in modern times, common law jurisdictions typically do not recognize allodial title. Exceptions include the United States and the United Kingdom allodial titles still exist. Apart from the countries that recognize allodial title, countries such as Canada, Ireland and Australia describe an allodial title as a form of fee simple property ownership, an absolute ownership right limited by government powers including taxation, eminent domain, police power and escheat.
In British common law, a legal loophole existed that allowed individuals to use allodial title to avoid paying estate taxes. Under this loophole, the property owner would will the land to a trustee for the use of a beneficiary. Trustees often abused their responsibilities forcing the heirs to use the courts of common law to recognize the legal rights of the use clause. Courts, however, would frequently grant title in law to the trustee. As a result, over time allodial titles became less and less common.
Forms of Security
Common law also helped to develop forms of security on titles such as the principle of mortgage. Common law recognizes the use of the property during the period where the titled property secures the mortgage. With allodial title, you can not secure the property with a mortgage or other lien since common law does not recognize the concept of allodial title. Therefore, with allodial title no legal means exists to secure the property.