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By the early 1940s Jews owned about one third of Mulk land in Palestine and Arabs about two-thirds. The vast majority of the total land, however, belonged to the government, meaning that when the state of Israel was established, it became legally Israel's. (I believe that about 77% of the land was owned by the government, assuming 6 million dunams of private land as shown in this invaluable webpage on the topic from which I got much of this information.
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When the State of Israel was established in 1948, it was due to a partition plan that was drawn up (numerous times) and voted on by the UN. It gave the favor to the Jewish leaders, thus granting them large chunks of land (that belonged to Arab gov't). "
Legally". Even though Palistinian leaders opposed it.
Don't get me wrong, I think the plan was a great idea. It was a solution that would have worked well had the Palestinian leaders not oppesed it so much. They felt like they were getting cheated, but I think if they could have looked into the future to see what would have become of Palestine, they may have looked at things differently. It could have worked well.