California's Sovereignty derives from it's State Constitution.  The state was admitted to the Union on Sept. 9, 1850, removing it from being a Federal Territory.  One of the first acts of the State Legislature was to pass legislation establishing the various counties of the state and creating a general index of land ownership thereunder.  The system fostered in the Federal Territorial land ownership under the Treaty of Guadalupe Hildago from a few years prior, which in turn validated the prior ownership system under Mexican rule.

The Federal Territorial status derives from the finalization of the war with Mexico under the Treaty of Guadalupe Hildago signed on February 2, 1848.

The treaty established all water rights issues that continue to this day.  In addition, the treaty (obviously) settled the war, and also fostered in the system of Mexican Ranchos which were part and parcel to the former system of Spanish colonial land grants from the crown, prior to Mexican independence. 

Of minor interest is the historical footnote of the Bear Flag Republic wherein American settlors to the Mexican Territory of California seized the Mexican fort at Sonoma, forced the Mexican Governor-General Vallejo (after a long mutual drinking session) to sign a treaty, established a Constitutional Republic modeled on the American system, electred William Brown Ide at the first and only President thereof, and for some months in the summer of 1848, and issued decrees of law that were posted on the flag pole at the fort during this time.  

The title research standards for our industry in California are to search Grantor and Grantee back to the most recent (re)subdivision of the land in the Official Records of the effective county.  Many of the original subdivision maps are a County recording of the federal land survey maps by the federal government or private recordings of Rancho maps by the wealthy families who still owned those lands.