FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                        Quarterly or Transitional Report



                      U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-QSB

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

                 For the quarterly period ended September 30, 2001


[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934


                For the transition period from _________to _________

                         Commission file number 0-14369


                     SHELTER  PROPERTIES VII LIMITED  PARTNERSHIP
       (Exact name of small business issuer as specified in its charter)



         South Carolina                                         57-0784852
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)

                          55 Beattie Place, P.O. Box 1089
                        Greenville, South Carolina 29602
                      (Address of principal executive offices)

                                 (864) 239-1000
                           (Issuer's telephone number)


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes X No___



                         PART I - FINANCIAL INFORMATION



ITEM 1.     FINANCIAL STATEMENTS


a)

                     SHELTER PROPERTIES VII LIMITED PARTNERSHIP
                           CONSOLIDATED BALANCE SHEET
                                   (Unaudited)
                          (in thousands, except unit data)

                               September 30, 2001


<TABLE>
<CAPTION>

Assets
<S>                                                           <C>            <C>
   Cash and cash equivalents                                                 $   660
   Receivables and deposits                                                       68
   Restricted escrows                                                             75
   Other assets                                                                   54
   Investment property:
      Land                                                     $   714
      Buildings and related personal property                    7,301
                                                                 8,015
      Less accumulated depreciation                             (4,012)        4,003
                                                                             $ 4,860

Liabilities and Partners' Capital
Liabilities
   Accounts payable                                                          $    33
   Tenant security deposit liabilities                                            38
   Accrued property taxes                                                         62
   Other liabilities                                                             123
   Mortgage notes payable                                                      4,376

Partners' Capital
   General partners                                             $ (99)
   Limited partners (17,343 units issued and
      outstanding)                                                327           228
                                                                            $ 4,860


            See Accompanying Notes to Consolidated Financial Statements
</TABLE>

<PAGE>




b)

                     SHELTER PROPERTIES VII LIMITED PARTNERSHIP
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                          (in thousands, except unit data)


<TABLE>
<CAPTION>
                                      Three Months Ended            Nine Months Ended
                                         September 30,                September 30,
                                     2001           2000           2001          2000


Revenues:
<S>                                  <C>           <C>            <C>           <C>
   Rental income                     $   450       $   926        $ 2,366       $2,791
   Other income                           65            84            222          196
   Gain on sale of investment
    property                           4,173            --          4,173           --
   Casualty gain                          --            --             18           --
       Total revenues                  4,688         1,010          6,779        2,987

Expenses:
   Operating                             196           400          1,027        1,150
   General and administrative             58            70            168          149
   Depreciation                           83           205            519          626
   Interest                              137           214            576          630
   Property taxes                         39            92            220          253
       Total expenses                    513           981          2,510        2,808

Income before extraordinary
  loss                                 4,175            29          4,269          179
Extraordinary loss on early
  extinguishment of debt                  (7)           --             (7)          --

Net income                           $ 4,168       $    29        $ 4,262       $  179

Net income allocated
   to general partners (1%)          $    42       $    --        $    43       $    2
Net income allocated
   to limited partners (99%)           4,126            29          4,219          177

                                     $ 4,168       $    29        $ 4,262       $  179
Net income per limited partnership unit:
  Income before extraordinary
    loss                             $238.31       $  1.68        $243.67       $10.21
  Extraordinary loss                    (.40)           --           (.40)          --
                                     $237.91       $  1.68        $243.27       $10.21
Distributions per limited
   partnership unit                  $274.47       $    --        $283.98       $11.42


            See Accompanying Notes to Consolidated Financial Statements
</TABLE>

<PAGE>


c)

                     SHELTER PROPERTIES VII LIMITED PARTNERSHIP
          CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
                                   (Unaudited)
                          (in thousands, except unit data)


<TABLE>
<CAPTION>

                                       Limited
                                     Partnership     General      Limited
                                        Units        Partners    Partners     Total

<S>                                     <C>           <C>         <C>        <C>
Original capital contributions          17,343        $    2      $17,343    $17,345

Partners' (deficit) capital at
   December 31, 2000                    17,343        $ (141)     $ 1,033    $   892

Distributions to partners                   --            (1)      (4,925)    (4,926)

Net income for the nine months
   ended September 30, 2001                 --            43        4,219      4,262

Partners' capital at
   September 30, 2001                   17,343        $  (99)      $ 327     $   228



            See Accompanying Notes to Consolidated Financial Statements
</TABLE>

<PAGE>



d)
                     SHELTER PROPERTIES VII LIMITED PARTNERSHIP
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                   (in thousands)
<TABLE>
<CAPTION>

                                                                 Nine Months Ended
                                                                   September 30,
                                                                  2001        2000
Cash flows from operating activities:
<S>                                                           <C>          <C>
   Net income                                                 $ 4,262      $   179
   Adjustments to reconcile net income to net
     cash provided by operating activities:
        Depreciation                                              519          626
        Amortization of discounts and loan costs                   55           33
        Gain on sale of investment property                    (4,173)          --
        Casualty gain                                             (18)          --
        Extraordinary loss on early extinguishment of debt          7           --
        Change in accounts:
            Receivables and deposits                              134           38
            Other assets                                           36          (42)
            Accounts payable                                      (65)          85
            Tenant security deposit liabilities                   (54)           8
            Accrued property taxes                               (164)         (95)
            Other liabilities                                     (17)         (12)

               Net cash provided by operating activities          522          820

Cash flows from investing activities:
   Property improvements and replacements                        (473)        (612)
   Net insurance proceeds                                          18           --
   Net receipts from (deposits to) restricted escrows               3          (38)
   Net proceeds from sale of investment property               11,333           --

               Net cash provided by (used in)
                  investing activities                         10,881         (650)

Cash flows from financing activities:
   Payments on mortgage notes payable                            (139)        (169)
   Repayment of mortgage note payable                          (5,990)          --
   Distributions to partners                                   (4,926)        (200)
   Advances from affiliate                                        150           --
   Payments on advances from affiliate                           (150)          --
   Loan costs paid                                                (32)          --

               Net cash used in financing activities          (11,087)        (369)

Net increase (decrease) in cash and cash equivalents              316         (199)
Cash and cash equivalents at beginning of period                  344          474
Cash and cash equivalents at end of period                    $   660      $   275
Supplemental disclosure of cash flow information:
   Cash paid for interest                                     $   509      $   612

Included in property  improvements  and  replacements  for the nine months ended
September 30, 2001 are approximately $60,000 of improvements which were included
in accounts payable at December 31, 2000.

Property improvements and replacements, accumulated depreciation and receivables
and  deposits at  September  30, 2000 were  adjusted  by $92,000,  $48,000,  and
$44,000  respectively,  resulting  from a May 2000  casualty  at  Hickory  Ridge
Apartments.


            See Accompanying Notes to Consolidated Financial Statements
</TABLE>

<PAGE>


e)

                     SHELTER PROPERTIES VII LIMITED PARTNERSHIP
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note A - Basis of Presentation

The  accompanying   unaudited   consolidated  financial  statements  of  Shelter
Properties VII Limited Partnership (the "Partnership" or "Registrant") have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the instructions to Form 10-QSB and Item 310 (b)
of Regulation S-B.  Accordingly,  they do not include all of the information and
footnotes  required by generally  accepted  accounting  principles  for complete
financial  statements.  In the opinion of Shelter  Realty VII  Corporation  (the
"Corporate  General Partner"),  all adjustments  (consisting of normal recurring
accruals)  considered  necessary  for a fair  presentation  have been  included.
Operating results for the three and nine month periods ended September 30, 2001,
are not  necessarily  indicative  of the results  that may be  expected  for the
fiscal year ending  December 31,  2001.  For further  information,  refer to the
consolidated   financial  statements  and  footnotes  thereto  included  in  the
Partnership's Annual Report on Form 10-KSB for the year ended December 31, 2000.
The  Corporate  General  Partner is a  subsidiary  of Apartment  Investment  and
Management Company ("AIMCO"), a publicly traded real estate investment trust.

Principles of Consolidation

The Registrant's financial statements include all the accounts of the Registrant
and its 99.9% owned  partnership.  The general partner of the partnership may be
removed by the Registrant;  therefore,  it is controlled and consolidated by the
Registrant. All significant interpartnership transactions have been eliminated.

Segment Reporting

Statement of Financial  Accounting Standards ("SFAS") No. 131, "Disclosure about
Segments of an Enterprise and Related Information" established standards for the
way that public business enterprises report information about operating segments
in annual  financial  statements  and  requires  that those  enterprises  report
selected  information about operating segments in interim financial reports.  It
also established  standards for related disclosures about products and services,
geographic  areas, and major customers.  As defined in SFAS 131, the Partnership
has only one reportable  segment.  The Corporate  General Partner  believes that
segment based disclosures will not result in a more meaningful presentation than
the consolidated financial statements as currently presented.


<PAGE>






Note B - Reconciliation of Cash Flows

As required by the Partnership  Agreement,  the following is a reconciliation of
"net cash provided by operating  activities"  in the  accompanying  consolidated
statement  of cash  flows to "net  cash  from  operations",  as  defined  in the
Partnership  Agreement.  However,  "net  cash  from  operations"  should  not be
considered  an  alternative  to net income as an indicator of the  Partnership's
operating performance or to cash flows as a measure of liquidity.

                                                            Nine Months Ended
                                                              September 30,
                                                           2001            2000
                                                              (in thousands)
Net cash provided by operating activities                 $  522          $ 820
   Payments on mortgage notes payable                       (139)          (169)
   Property improvements and replacements                   (473)          (612)
   Change in restricted escrows, net                           3            (38)
   Changes in reserves for net operating
      liabilities                                            130             18
   Additional reserves                                       (43)           (19)

      Net cash used in operations                         $   --          $  --

The Corporate  General  Partner  reserved an  additional  $43,000 and $19,000 at
September  30, 2001 and 2000,  respectively,  to fund capital  improvements  and
repairs at the Partnership's investment property.

Note C - Transactions with Affiliated Parties

The  Partnership  has no employees  and is dependent  on the  Corporate  General
Partner  and  its  affiliates  for  the  management  and  administration  of all
partnership  activities.  The  Partnership  Agreement  provides  for (i) certain
payments to affiliates for services and (ii)  reimbursement  of certain expenses
incurred by affiliates on behalf of the Partnership. The following payments were
paid or accrued to the Corporate  General Partner and affiliates during the nine
months ended September 30, 2001 and 2000:

                                                          2001       2000
                                                          (in thousands)

Property management fees (included in
  operating expenses)                                     $139       $155
Reimbursements for services of affiliates
  (included in general and administrative,
  operating expenses and investment properties)            367         94

Affiliates of the Corporate  General Partner are entitled to receive 5% of gross
receipts  from  both  of the  Registrant's  properties  for  providing  property
management  services.  The  Registrant  paid  to such  affiliates  approximately
$139,000 and $155,000  for the nine months  ended  September  30, 2001 and 2000,
respectively.

An  affiliate  of the  Corporate  General  Partner  received  reimbursements  of
accountable  administrative  expenses  amounting to  approximately  $367,000 and
$94,000 for the nine months  ended  September  30, 2001 and 2000,  respectively.
Included  in  these  amounts  at  September  30,  2001  are   reimbursements  of
approximately  $265,000 for  construction  oversight  costs.  There were no such
costs during the nine months ended September 30, 2000.

In  accordance  with the  Partnership  Agreement,  an affiliate of the Corporate
General Partner loaned the Partnership  $150,000 to cover operating  expenses at
Hickory Ridge  Apartments.  The entire balance was repaid during the nine months
ended  September  30,  2001.  Interest  was  charged  at the prime rate plus 2%.
Interest  expense was  approximately  $2,000 for the nine months ended September
30, 2001.  There were no loans from the General  Partner or associated  interest
expense during the nine months ended September 30, 2000.

In addition to its indirect  ownership of the general  partner  interests in the
Partnership,  AIMCO and its affiliates  owned 10,509 limited  partnership  units
(the "Units") in the Partnership representing 60.60% of the outstanding Units at
September  30,  2001. A number of these Units were  acquired  pursuant to tender
offers  made by  AIMCO  or its  affiliates.  It is  possible  that  AIMCO or its
affiliates will make one or more additional offers to acquire additional limited
partnership  interests in the  Partnership  for cash or in exchange for units in
the operating partnership of AIMCO. Under the Partnership Agreement, unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters,  which would  include  voting on certain  amendments  to the
Partnership  Agreement and voting to remove the Corporate General Partner.  As a
result  of its  ownership  of  60.60% of the  outstanding  Units,  AIMCO is in a
position to control all voting  decisions with respect to the  Registrant.  When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Corporate General Partner because of its
affiliation with the Corporate General Partner.

Note D - Distributions

During the nine months ended  September 30, 2001, the  Partnership  declared and
paid  distributions  of  approximately  $86,000  (approximately  $85,000  to the
limited  partners or $4.90 per limited  partnership  unit) from  operations  and
approximately  $4,366,000  ($251.75 per limited  partnership  unit) from the net
proceeds of the sale of Hickory Ridge.  The Partnership also paid a distribution
of previously undistributed refinance proceeds of approximately $474,000 ($27.33
per limited  partnership  unit) to the limited  partners  during the nine months
ended  September 30, 2001.  During the nine months ended September 30, 2000, the
Partnership  paid a  distribution  from  operations  of  approximately  $200,000
(approximately   $198,000  to  the  limited   partners  or  $11.42  per  limited
partnership unit).


<PAGE>






Note E - Casualty Gain

During  the nine  months  ended  September  30,  2001,  a net  casualty  gain of
approximately  $18,000 was recognized at Hickory Ridge Apartments.  The casualty
gain related to a fire that damaged 5 apartment  units in May 2000. The gain was
a result of final  insurance  proceeds  of  approximately  $18,000  received  in
February  2001.  The  related  assets  were  written  off  during the year ended
December 31, 2000; therefore, the entire proceeds were recognized as a gain.

Note F - Sale of Investment Property

On July 16, 2001, the Partnership  sold Hickory Ridge Apartments to an unrelated
third  party for net  proceeds of  approximately  $11,333,000  after  payment of
closing costs. The Partnership realized a gain of approximately  $4,173,000 as a
result of the sale. The  Partnership  used  approximately  $5,990,000 of the net
proceeds to repay the  mortgage  encumbering  the  property.  In  addition,  the
Partnership  recorded an extraordinary  loss on early  extinguishment of debt of
approximately $7,000 as a result of unamortized loan costs being written off.

Note G - Legal Proceedings

In March 1998, several putative  unitholders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the Partnership,  its Corporate  General Partner and
several of their  affiliated  partnerships  and corporate  entities.  The action
purports  to  assert  claims  on  behalf  of a class  of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  which are named as nominal  defendants,  challenging,  among other
things,  the  acquisition of interests in certain  general  partner  entities by
Insignia  Financial  Group,  Inc.  ("Insignia")  and entities which were, at one
time,  affiliates of Insignia;  past tender offers by the Insignia affiliates to
acquire  limited  partnership  units;  management  of  the  partnerships  by the
Insignia  affiliates;  and the series of transactions which closed on October 1,
1998 and  February 26, 1999 whereby  Insignia  and  Insignia  Properties  Trust,
respectively,  were merged into AIMCO.  The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998,  the Corporate  General  Partner filed a motion  seeking  dismissal of the
action.  In lieu of responding to the motion,  the  plaintiffs  filed an amended
complaint.  The  Corporate  General  Partner  filed  demurrers  to  the  amended
complaint which were heard February 1999.

Pending the ruling on such  demurrers,  settlement  negotiations  commenced.  On
November 2, 1999,  the parties  executed and filed a Stipulation  of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  at which time
the Court set a final  approval  hearing for  December  10,  1999.  Prior to the
December  10,  1999  hearing,  the  Court  received  various  objections  to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement.  On
December 14, 1999, the Corporate  General Partner and its affiliates  terminated
the  proposed  settlement.  In  February  2000,  counsel  for some of the  named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated  the  settlement.  On June  27,  2000,  the  Court  entered  an order
disqualifying  them  from the case and an  appeal  was  taken  from the order on
October 5, 2000. On December 4, 2000, the Court  appointed the law firm of Lieff
Cabraser  Heimann & Bernstein  LLP as new lead  counsel for  plaintiffs  and the
putative class.  Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001,  the  Corporate  General  Partner and its  affiliates  filed a
demurrer to the third amended  complaint.  On May 14, 2001,  the Court heard the
demurrer to the third amended  complaint.  On July 10, 2001, the Court issued an
order  sustaining  defendants'  demurrer on certain  grounds.  On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs  filed a fourth amended class and  derivative  action  complaint.  On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration.  On
October 5, 2001, the Corporate General Partner and affiliated defendants filed a
demurrer to the fourth amended complaint,  which, together with a demurrer filed
by other  defendants,  is currently  scheduled to be heard on November 15, 2001.
The Court has set the matter for trial in January 2003.

During the third  quarter of 2001, a complaint  (the "Heller  action") was filed
against  the same  defendants  that are named in the  Nuanes  action,  captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended  complaint.  The first amended complaint in the Heller action is
brought as a purported  derivative  action,  and asserts  claims for among other
things  breach  of  fiduciary  duty;  unfair  competition;   conversion,  unjust
enrichment;  and judicial  dissolution.  Plaintiffs in the Nuanes action filed a
motion to  consolidate  the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed  without  leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the Corporate  General Partner and affiliated
defendants  moved to strike the first  amended  complaint  in its  entirety  for
violating  the Court's July 10, 2001 order  granting in part and denying in part
defendants'  demurrer in the Nuanes action, or alternatively,  to strike certain
portions of the complaint based on the statute of limitations.  Other defendants
in the action  demurred to the fourth  amended  complaint,  and,  alternatively,
moved to strike the complaint.  The matters are currently  scheduled to be heard
on November 15, 2001.

The Corporate General Partner does not anticipate that any costs,  whether legal
or  settlement  costs,  associated  with  these  cases will be  material  to the
Partnership's overall operations.

The  Partnership is unaware of any other pending or outstanding  litigation that
is not of a routine nature arising in the ordinary course of business.



<PAGE>




Item 2.     Management's Discussion and Analysis or Plan of Operation

The  matters  discussed  in this Form  10-QSB  contain  certain  forward-looking
statements  and  involve  risks and  uncertainties  (including  changing  market
conditions,   competitive  and  regulatory   matters,   etc.)  detailed  in  the
disclosures  contained  in this  Form  10-QSB  and the  other  filings  with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussion of the  Registrant's  business and results of  operations,  including
forward-looking  statements  pertaining  to such  matters,  does not  take  into
account the effects of any changes to the  Registrant's  business and results of
operation.  Accordingly,  actual  results  could  differ  materially  from those
projected in the forward-looking  statements as a result of a number of factors,
including those identified herein.

The Partnership's  investment  property consists of one apartment  complex.  The
following  table sets forth the average  occupancy  of the property for the nine
months ended September 30, 2001 and 2000:

                                                             Average
                                                            Occupancy
Property                                                2001          2000

Governor's Park Apartments                              92%           92%
  Ft. Collins, Colorado

Results of Operations

The  Partnership's  net income for the three and nine months ended September 30,
2001 was  approximately  $4,168,000 and  $4,262,000,  respectively,  compared to
approximately $29,000 and $179,000,  respectively, for the three and nine months
ended  September  30,  2000.  The  increase in net income for the three and nine
months  ended  September  30,  2001 is due to the  increase  in  total  revenues
resulting from the gain on sale of Hickory Ridge.

On July 16, 2001, the Partnership sold Hickory Ridge to an unrelated third party
for net proceeds of  approximately  $11,333,000  after payment of closing costs.
The Partnership  realized a gain of approximately  $4,173,000 as a result of the
sale. The Partnership used approximately $5,990,000 of the net proceeds to repay
the mortgages encumbering the property. In addition, the Partnership recorded an
extraordinary loss on early  extinguishment of debt of approximately $7,000 as a
result of the prepayment  penalties and unamortized loan costs and debt discount
being written off.

Excluding the impact of the  operations  and sale of Hickory  Ridge,  net income
increased approximately $64,000 and $143,000 for the three and nine months ended
September 30, 2001, compared to the corresponding  periods in 2000. The increase
in net income for the three month period ended  September  30, 2001 is due to an
increase in total revenues and a decrease in total expenses. The increase in net
income for the nine  months  ended  September  30, 2001 is due to an increase in
total revenues. Total expenses remained constant for the comparable periods. The
increase in total  revenues  for the three and nine month  periods was due to an
increase in rental income and other income.  Rental income increased as a result
of increase in average rental rates at Governor's  Park.  Other income increased
due to an increase in tenant and utility  reimbursements  and fees at Governor's
Park.

The decrease in total expenses for the three months ended September 30, 2001 was
a result of a decrease in  operating  and general and  administrative  expenses.
Operating  expenses decreased due to a decrease in salaries and contract work at
Governor's Park. General and administrative expenses decreased due to a decrease
in reimbursements to the Corporate General Partner.

Included  in general  and  administrative  expense for the three and nine months
ended September 30, 2001 are management  reimbursements to the Corporate General
Partner  as  allowed  under the  Partnership  Agreement.  In  addition  to these
reimbursements,  costs  associated with the quarterly and annual  communications
with  investors  and  regulatory  agencies and the annual  audit and  appraisals
required  by  the  Partnership  Agreement  are  also  included  in  general  and
administrative expenses.

During  the nine  months  ended  September  30,  2001,  a net  casualty  gain of
approximately  $18,000 was recognized at Hickory Ridge Apartments.  The casualty
gain related to a fire that damaged 5 apartment  units in May 2000. The gain was
a result of final  insurance  proceeds  of  approximately  $18,000  received  in
February  2001.  The  related  assets  were  written  off  during the year ended
December 31, 2000; therefore, the entire proceeds were recognized as a gain.

As part of the ongoing business plan of the Partnership,  the Corporate  General
Partner  monitors the rental market  environment of its  investment  property to
assess the feasibility of increasing rents,  maintaining or increasing occupancy
levels and protecting  the  Partnership  from increases in expenses.  As part of
this plan, the Corporate  General  Partner  attempts to protect the  Partnership
from the burden of  inflation-related  increases in expenses by increasing rents
and maintaining a high overall occupancy level.  However, due to changing market
conditions,  which  can  result  in the use of  rental  concessions  and  rental
reductions to offset softening market conditions, there is no guarantee that the
Corporate General Partner will be able to sustain such a plan.

Liquidity and Capital Resources

At  September  30,  2001,  the  Registrant  had  cash and  cash  equivalents  of
approximately $660,000 compared to approximately $275,000 at September 30, 2000.
The  increase  in cash and cash  equivalents  of  approximately  $316,000  since
December  31, 2000 is due to  approximately  $522,000  and  $10,881,000  of cash
provided  by  operating  and  investing  activities,   respectively,  offset  by
approximately $11,087,000 of cash used in financing activities. Cash provided by
investing  activities  consisted of proceeds from the sale of Hickory Ridge and,
to a lesser  extent,  net receipts  from  restricted  escrows  maintained by the
mortgage lender offset by property  improvements and replacements.  Cash used in
financing  activities  consisted  of  distributions  to  partners,  repayment of
mortgage  notes  payable,  loan  costs  paid,  principal  payments  made  on the
mortgages encumbering the Registrant's  properties and payments on advances from
an affiliate  offset by advances from an affiliate.  The Registrant  invests its
working capital reserves in interest bearing accounts.

The sufficiency of existing  liquid assets to meet future  liquidity and capital
expenditure   requirements   is  directly   related  to  the  level  of  capital
expenditures required at the property to adequately maintain the physical assets
and other operating  needs of the Registrant and to comply with Federal,  state,
local, legal and regulatory  requirements.  Capital improvements planned for the
Registrant's property is detailed below.

Hickory Ridge Apartments: Prior to its sale, the Partnership spent approximately
$325,000 in capital  improvements  at Hickory  Ridge  Apartments.  These capital
improvements  consisted primarily of floor covering and appliance  replacements,
fencing improvements and reconstruction from fire damage.

Governor's Park Apartments:  The Partnership budgeted approximately $242,000 for
the year 2001 for capital  improvements,  consisting primarily of structural and
parking lot  enhancements  and appliance and floor  covering  replacements.  The
Partnership   completed   approximately   $88,000  in  capital  expenditures  at
Governor's  Park  Apartments  during the nine months ended  September  30, 2001,
consisting  primarily of carpet and appliance  replacements.  These improvements
were funded primarily from operations and replacement reserves.

Additional capital improvements planned for 2001 at the Partnership's  remaining
property  will be incurred  only if cash is available  from  operations  or from
Partnership  reserves. To the extent that such budgeted capital improvements are
completed,  the Registrant's  distributable  cash flow, if any, may be adversely
affected at least in the short term.

The  Registrant's  current assets are thought to be sufficient for any near term
needs (exclusive of capital improvements) of the Registrant. Governor's Park has
mortgage  indebtedness  of  approximately  $4,376,000,  net of  discount,  which
matures October 15, 2003 with a balloon payment of approximately  $4,230,000 due
at that time.  The  Corporate  General  Partner will  attempt to  refinance  the
Governor's  Park  indebtedness  and/or sell the  property  prior to its maturity
date. If the property cannot be refinanced or sold for a sufficient  amount, the
Registrant will risk losing the property through foreclosure.

During the nine months ended  September 30, 2001, the  Partnership  declared and
paid  distributions  of  approximately  $86,000  (approximately  $85,000  to the
limited  partners or $4.90 per limited  partnership  unit) from  operations  and
approximately  $4,366,000  ($251.75 per limited  partnership  unit) from the net
proceeds of the sale of Hickory Ridge.  The Partnership also paid a distribution
of previously undistributed refinance proceeds of approximately $474,000 ($27.33
per limited  partnership  unit) to the limited  partners  during the nine months
ended  September 30, 2001.  During the nine months ended September 30, 2000, the
Partnership  paid a  distribution  from  operations  of  approximately  $200,000
(approximately   $198,000  to  the  limited   partners  or  $11.42  per  limited
partnership unit). The Registrant's distribution policy is reviewed on a monthly
basis. Future cash distributions will depend on the levels of net cash generated
from  operations,  the  availability  of cash  reserves,  and the timing of debt
maturities, refinancings, and/or sale of the property. There can be no assurance
that the  Registrant  will  generate  sufficient  funds  from  operations  after
required  capital  expenditures  to permit any additional  distributions  to its
partners in 2001 or subsequent periods.  Distributions may also be restricted by
the  requirement  to deposit net  operating  income (as defined in the  mortgage
note) into the reserve  account until the reserve account is funded by an amount
equal to a minimum of $200 and a maximum of $400 per  apartment  unit or $37,600
to $75,200 in total at Governor's  Park.  As of September 30, 2001,  the reserve
account had a balance of approximately $75,000.

In addition to its indirect  ownership of the general  partner  interests in the
Partnership,  AIMCO and its affiliates  owned 10,509 limited  partnership  units
(the "Units") in the Partnership representing 60.60% of the outstanding Units at
September  30,  2001. A number of these Units were  acquired  pursuant to tender
offers  made by  AIMCO  or its  affiliates.  It is  possible  that  AIMCO or its
affiliates will make one or more additional offers to acquire additional limited
partnership  interests in the  Partnership  for cash or in exchange for units in
the operating partnership of AIMCO. Under the Partnership Agreement, unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters,  which would  include  voting on certain  amendments  to the
Partnership  Agreement and voting to remove the Corporate General Partner.  As a
result  of its  ownership  of  60.60% of the  outstanding  Units,  AIMCO is in a
position to control all voting  decisions with respect to the  Registrant.  When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Corporate General Partner because of its
affiliation with the Corporate General Partner.


<PAGE>





                           PART II - OTHER INFORMATION


ITEM 1.     LEGAL PROCEEDINGS

In March 1998, several putative  unitholders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the Partnership,  its Corporate  General Partner and
several of their  affiliated  partnerships  and corporate  entities.  The action
purports  to  assert  claims  on  behalf  of a class  of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  which are named as nominal  defendants,  challenging,  among other
things,  the  acquisition of interests in certain  general  partner  entities by
Insignia  Financial  Group,  Inc.  ("Insignia")  and entities which were, at one
time,  affiliates of Insignia;  past tender offers by the Insignia affiliates to
acquire  limited  partnership  units;  management  of  the  partnerships  by the
Insignia  affiliates;  and the series of transactions which closed on October 1,
1998 and  February 26, 1999 whereby  Insignia  and  Insignia  Properties  Trust,
respectively,  were merged into AIMCO.  The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998,  the Corporate  General  Partner filed a motion  seeking  dismissal of the
action.  In lieu of responding to the motion,  the  plaintiffs  filed an amended
complaint.  The  Corporate  General  Partner  filed  demurrers  to  the  amended
complaint which were heard February 1999.

Pending the ruling on such  demurrers,  settlement  negotiations  commenced.  On
November 2, 1999,  the parties  executed and filed a Stipulation  of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  at which time
the Court set a final  approval  hearing for  December  10,  1999.  Prior to the
December  10,  1999  hearing,  the  Court  received  various  objections  to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement.  On
December 14, 1999, the Corporate  General Partner and its affiliates  terminated
the  proposed  settlement.  In  February  2000,  counsel  for some of the  named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated  the  settlement.  On June  27,  2000,  the  Court  entered  an order
disqualifying  them  from the case and an  appeal  was  taken  from the order on
October 5, 2000. On December 4, 2000, the Court  appointed the law firm of Lieff
Cabraser  Heimann & Bernstein  LLP as new lead  counsel for  plaintiffs  and the
putative class.  Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001,  the  Corporate  General  Partner and its  affiliates  filed a
demurrer to the third amended  complaint.  On May 14, 2001,  the Court heard the
demurrer to the third amended  complaint.  On July 10, 2001, the Court issued an
order  sustaining  defendants'  demurrer on certain  grounds.  On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs  filed a fourth amended class and  derivative  action  complaint.  On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration.  On
October 5, 2001, the Corporate General Partner and affiliated defendants filed a
demurrer to the fourth amended complaint,  which, together with a demurrer filed
by other  defendants,  is currently  scheduled to be heard on November 15, 2001.
The Court has set the matter for trial in January 2003.

During the third  quarter of 2001, a complaint  (the "Heller  action") was filed
against  the same  defendants  that are named in the  Nuanes  action,  captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended  complaint.  The first amended complaint in the Heller action is
brought as a purported  derivative  action,  and asserts  claims for among other
things  breach  of  fiduciary  duty;  unfair  competition;   conversion,  unjust
enrichment;  and judicial  dissolution.  Plaintiffs in the Nuanes action filed a
motion to  consolidate  the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed  without  leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the Corporate  General Partner and affiliated
defendants  moved to strike the first  amended  complaint  in its  entirety  for
violating  the Court's July 10, 2001 order  granting in part and denying in part
defendants'  demurrer in the Nuanes action, or alternatively,  to strike certain
portions of the complaint based on the statute of limitations.  Other defendants
in the action  demurred to the fourth  amended  complaint,  and,  alternatively,
moved to strike the complaint.  The matters are currently  scheduled to be heard
on November 15, 2001.

The Corporate General Partner does not anticipate that any costs,  whether legal
or  settlement  costs,  associated  with  these  cases will be  material  to the
Partnership's overall operations.


<PAGE>



ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            a)    Exhibits:

                  None.

            b)    Reports on Form 8-K:

                  Current  report  on  Form  8-K  filed  on  July  18,  2001  in
                  connection with the sale of Hickory Ridge on July 16, 2001.


<PAGE>


                                   SIGNATURES



In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.



                                 SHELTER PROPERTIES VII LIMITED PARTNERSHIP

                                 By:     Shelter Realty VII Corporation
                                         Corporate General Partner

                                 By:     /s/Patrick J. Foye
                                         Patrick J. Foye
                                         Executive Vice President

                                 By:     /s/Martha L. Long
                                         Martha L. Long
                                         Senior Vice President
                                         and Controller

                                 Date:   November 6, 2001