When the Treaty of Guadalupe Hidalgo ceded Alta California to the United States, one of its Articles guaranteed that "all grants of land made by the Mexican government...shall be respected as valid." But an early Act of Congress after California had been admitted to the Union was to pass the California Land Act. This provided that each Spanish and Mexican land grant had to be reviewed and approved by a land court. Rancheros had to prove legitimate title of land now surveyed under the American system of measurement.

Meantime, state law allowed squatters to pre-empt land on which the title had not yet been confirmed, and if the grant was finally patented, the owner had to reimburse the squatter for the cost of his improvements on the land.

The California economy was relatively cash-poor, and land speculators, farmers with cash and squatters ended up owning or claiming portions of almost every rancho in the state. The Livermore Valley was no exception to this situation. Judge J. H. Taylor, who had come to the valley in 1853 observed that "in 1867 there was what might be termed a general rush, particularly in the eastern portion of the valley by men who had hoped to find government land on which they could settle and make their homes. At that time all land titles were considered questionable. What was termed 'squatting' was the order of the day on every quarter section of land. This resulted in litigation, and Livermore Valley became a place that delighted the hearts of the legal fraternity. Some of the squatters succeeded in perfecting their titles to the land on which they had settled, but lawyers' fees left them so badly embarrassed that many sold out and left the valley."

Although some of the problems with land titles can be charged to the uncertainty of the Livermore Grant boundaries, litigation initiated by the railroad contributed its share. A great deal of land was given to the railroad company and transferred to Charles McLaughlin, one of the contractors, who received it in payment for his work. As a result expensive litigation and harassment of pre-emptors followed. A final survey approved by the General Land Office in Washington on March 1, 1871, finally settled the matter.

It was this last survey that finally allowed the heirs of Robert Livermore, who had died in 1858, to settle his estate. By law, the executor of the estate had to be bonded for $15,000, not only a large sum at the time, but crippling to a family whose resources were not in cash, that being the only acceptable medium to the State. The Livermores sold as many of their cattle as possible, but in a depressed market, to raise funds. They borrowed money. using land as collateral. By the time Livermore's estate was settled on May 30, 1871, the original 48,000 acres originally claimed had been whittled down to 4,000. Here was a case where the interests of settlers and the State of California took precedence over the heirs' claim by giving away over 90% of the original grant to new owners before the children could receive title to their father's estate.