Final answer:
The major issue with large land grant holders in California was the highly concentrated ownership of vast amounts of land by a handful of families, which was eventually broken up following the Mexican-American War due to non-recognition of claims or American option (c) annexation interests.
Step-by-step explanation:
The major problem with the large land grant holders in California was the intense concentration of large swathes of land, wealth, and power into the hands of a few dozen families. These landholders operated massive cattle ranches, employing indigenous and mestizo laborers.
After the Mexican-American War, however, most large ranchos were broken up due to a lack of recognition by the U.S. government for their property claims or because of the land being coveted by powerful American interests.
A feudal-style land tenure system developed during the Mexican era. Some of these ranchos mimicked large agricultural plantations, similar to those of the Deep South.
Yet, with the influx of American settlers and the growing influence of real estate developers, these holdings often became suburban home lots or were repurposed into state parks or other public spaces.