Land ownership in the early Germanic kindoms were based on the traditions of the German wartribes. The land belonged to the warchief who would gift portions it to loyal or effective warriors. This gifts, or fiefs, served an economic function by allowing the vassal to provide for their own equipment as mounted cavalry was an expensive weapon system to maintain.

This fief was not intended to be a permanent or hereditary gift. The cheif or king would take control of the fief after the death of their vassal to be given back out to a new vassal. The vassal's heirs soon began to pay an inheritence tax in order to maintain control of the fief, creating an informal permanence that became a formality by the 10th century. In addition, vassals could further subdivide their lands among sub-vassals, though the question of who the sub-vassals loyalty belonged to was a legal debate.

Of course, this led to a more decentralized control of the region and to the rise of fuedalism. As vassals accumulated more land, they were able to grow in power and attract more sub-vassals, knights, and a larger pool of manpower for fielding a fighting force. Under the Merovingians, this caused an increasing issue as the king's practical application of power and authority eventually dwindled to just the lands controlled directly by the monarchy.

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Reference:

Norman Cantor, Civilization of the Middle Ages.