Land Installment Contracts and 1031??

Hey Guys,

I’ve been reading up a lot lately on purchasing properties through the method of a land installment contract.

Later, I was reading an ebook written by Bill Gatten, about the advantages of using a CAL PAC trust to take a property Subject to. In it, he said that one of the advantages his CAL PAC trust held over a conventional land installment contract method was that the latter surrendered the property’s elegibility for 1031 deferred tax status.

Does anyone know if this is in fact true? and how exactly does it lose its elegibility?

And also, on an even more basic level, after reviewing the structure of a land installment contract, how is that even a violation of the due-on-sale clause anyhow? The original seller still has the deed and is making the payments, your just compesating him for them.

Any help on either of these two issues would be great. These forums have yielded me much sound advice in the past!