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 June 30, 2000


[ ] 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 per unit data)

                                  June 30, 2000
<TABLE>
<CAPTION>

Assets

<S>                                                           <C>               <C>
   Cash and cash equivalents                                                 $   287
   Receivables and deposits                                                      216
   Restricted escrows                                                             69
   Other assets                                                                  160
   Investment properties:
      Land                                                    $  1,774
      Buildings and related personal property                   21,346
                                                                23,120

      Less accumulated depreciation                            (12,006)       11,114
                                                                            $ 11,846

Liabilities and Partners' (Deficit) Capital
Liabilities

   Accounts payable                                                          $   105
   Tenant security deposit liabilities                                            80
   Accrued property taxes                                                        161
   Other liabilities                                                             152
   Mortgage notes payable                                                     10,621

Partners' (Deficit) Capital

   General partners                                            $ (142)
   Limited partners (17,343 units issued and
      outstanding)                                                 869           727
                                                                            $ 11,846

            See Accompanying Notes to Consolidated Financial Statements
</TABLE>

b)

                     SHELTER PROPERTIES VII LIMITED PARTNERSHIP
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (Unaudited)

                          (in thousands, except unit data)

<TABLE>
<CAPTION>


                                      Three Months Ended            Six Months Ended
                                           June 30,                     June 30,
                                     2000           1999           2000          1999
Revenues:
<S>                                  <C>           <C>            <C>           <C>
   Rental income                     $  908        $  964         $1,865        $1,897
   Other income                          67            50            112            94
       Total revenues                   975         1,014          1,977         1,991

Expenses:
   Operating                            352           316            750           638
   General and administrative            42            60             79           103
   Depreciation                         213           204            421           415
   Interest                             215           219            416           443
   Property taxes                        85            10            161            61
       Total expenses                   907           809          1,827         1,660

   Net income                        $   68        $  205         $  150        $  331

Net income allocated

   to general partners (1%)          $    1        $    2         $    2        $    3
Net income allocated

   to limited partners (99%)             67           203            148           328

                                     $   68        $  205         $  150        $  331
Net income per limited
   partnership unit                  $ 3.86        $11.70         $ 8.53        $18.91

Distributions per limited

   partnership unit                  $11.42        $   --         $11.42        $34.25

            See Accompanying Notes to Consolidated Financial Statements
</TABLE>

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, 1999                    17,343       $ (142)      $   919    $   777

Distributions to partners                   --           (2)         (198)      (200)

Net income for the six months
   ended June 30, 2000                      --             2          148        150

Partners' (deficit) capital at
   June 30, 2000                        17,343       $ (142)       $  869    $   727

            See Accompanying Notes to Consolidated Financial Statements
</TABLE>

d)

                     SHELTER PROPERTIES VII LIMITED PARTNERSHIP
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (Unaudited)

                                   (in thousands)

<TABLE>
<CAPTION>

                                                                  Six Months Ended
                                                                        June 30,

                                                                  2000        1999
Cash flows from operating activities:

<S>                                                           <C>          <C>
   Net income                                                 $   150      $   331
   Adjustments to reconcile net income to net
     cash provided by operating activities:
        Depreciation                                              421          415
        Amortization of discounts and loan costs                   22           25
        Change in accounts:
            Receivables and deposits                              (36)          78
            Other assets                                          (54)          (2)
            Accounts payable                                       32           (8)
            Tenant security deposit liabilities                     1            4
            Accrued property taxes                                (59)        (124)
            Other liabilities                                     (37)           2

               Net cash provided by operating activities          440          721

Cash flows from investing activities:

   Property improvements and replacements                        (286)        (173)
   Net deposits to restricted escrows                             (30)          (2)

               Net cash used in investing activities             (316)        (175)

Cash flows from financing activities:

   Payments on mortgage notes payable                            (111)        (102)
   Distributions to partners                                     (200)        (600)

               Net cash used in financing activities             (311)        (702)

Net decrease in cash and cash equivalents                        (187)        (156)
Cash and cash equivalents at beginning of period                  474        1,201
Cash and cash equivalents at end of period                    $   287      $ 1,045

Supplemental disclosure of cash flow information:

   Cash paid for interest                                     $   409      $   418

            See Accompanying Notes to Consolidated Financial Statements
</TABLE>

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 six month periods ended June 30, 2000,  are
not  necessarily  indicative  of the results that may be expected for the fiscal
year  ending  December  31,  2000.  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, 1999

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  consolidated
partnership is Shelter Realty VII  Corporation.  Shelter Realty VII  Corporation
may be removed by the Registrant;  therefore,  the  consolidated  partnership is
controlled and consolidated by the Registrant. All significant  interpartnership
transactions have been eliminated.

Note B - Transfer of Control

Pursuant  to a series  of  transactions  which  closed  on  October  1, 1998 and
February 26, 1999,  Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment  Investment and Management Company  ("AIMCO"),  a publicly
traded real estate investment trust, with AIMCO being the surviving  corporation
(the "Insignia Merger").  As a result, AIMCO acquired 100% ownership interest in
the Corporate  General Partner.  The Corporate  General Partner does not believe
that this  transaction has had or will have a material effect on the affairs and
operations of the Partnership.

Note C - Reconciliation of Cash Flows

The  following  is  a  reconciliation   of  the  subtotal  on  the  accompanying
consolidated  statements of cash flows captioned "net cash provided by operating
activities"  to "net cash used in  operations",  as defined  in the  Partnership
Agreement.  However,  "net cash used in 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.

                                                          Six Months Ended
                                                              June 30,
                                                        2000             1999
                                                           (in thousands)
Net cash provided by operating activities              $ 440           $   721
   Payments on mortgage notes payable                   (111)            (102)
   Property improvements and replacements               (286)            (173)
   Change in restricted escrows, net                     (30)              (2)
   Changes in reserves for net operating
      liabilities                                        153               50
   Additional reserves                                  (166)             (94)

      Net cash used in operations                      $  --           $  400

The Corporate  General  Partner  reserved an additional  $166,000 and $94,000 at
June 30, 2000 and 1999,  respectively,  to fund capital improvements and repairs
at the Partnership's two investment properties.

Note D - 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 six
months ended June 30, 2000 and 1999:

                                                          2000       1999
                                                          (in thousands)

Property management fees (included in
  operating expenses)                                     $102       $100
Reimbursements for services of affiliates
  (included in general and administrative
  and operating expenses and investment properties)         41         36

During the six months ended June 30, 2000 and 1999,  affiliates of the Corporate
General  Partner were 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  $102,000 and $100,000 for the
six months ended June 30, 2000 and 1999, respectively.

An  affiliate  of the  Corporate  General  Partner  received  reimbursements  of
accountable  administrative  expenses  amounting  to  approximately  $41,000 and
$36,000 for the six months ended June 30, 2000 and 1999, respectively.

AIMCO and its affiliates  currently own 9,210 limited  partnership  units in the
Partnership  representing  53.10% of the  outstanding  units.  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. As a result of its
ownership  of  53.105%  of the  outstanding  units,  AIMCO is in a  position  to
influence all voting decisions with respect to the  Reigstrtant.  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 their
affiliation with the Corporate General Partner.

Note E - Segment Reporting

Description  of the types of products  and  services  from which the  reportable
segment derives its revenues:

The  Partnership  has  one  reportable  segment:   residential  properties.  The
Partnership's  residential property segment consists of two apartment complexes,
located in Tennessee and Colorado.  The  Partnership  rents  apartment  units to
tenants for terms that are typically twelve months or less.

Measurement of segment profit or loss:

The  Partnership  evaluates  performance  based on segment  profit (loss) before
depreciation.  The accounting policies of the reportable segment are the same as
those of the Partnership as described in the Partnership's Annual Report on Form
10-KSB for the year ended December 31, 1999.

Factors management used to identify the enterprise's reportable segment:

The  Partnership's  reportable  segment  consists of investment  properties that
offer similar products and services.  Although each of the investment properties
is  managed  separately,  they have been  aggregated  into one  segment  as they
provide services with similar types of products and customers.

Segment  information for the three and six month periods ended June 30, 2000 and
1999 is shown in the tables  below.  The  "Other"  column  includes  partnership
administration  related  items and  income  and  expense  not  allocated  to the
reportable segment.

Three Months Ended June 30, 2000      Residential     Other     Total
                                               (in thousands)
Rental income                          $   908      $   --      $908
Other income                                67          --        67
Interest expense                           215          --       215
Depreciation                               213          --       213
General and administrative expense          --          42        42
Segment profit (loss)                      110         (42)       68

Six Months Ended June 30, 2000        Residential     Other     Total
                                               (in thousands)
Rental income                          $ 1,865      $   --      $1,865
Other income                               110           2         112
Interest expense                           416          --         416
Depreciation                               421          --         421
General and administrative expense          --          79          79
Segment profit (loss)                      227         (77)        150
Total assets                            11,742         104      11,846
Capital expenditures                       286          --         286


Three Months Ended June 30, 1999      Residential     Other     Total
                                               (in thousands)
Rental income                          $   964       $  --      $ 964
Other income                                49           1         50
Interest expense                           219          --        219
Depreciation                               204          --        204
General and administrative expense          --          60         60
Segment profit (loss)                      264         (59)       205


Six Months Ended June 30, 1999        Residential     Other     Total
                                               (in thousands)
Rental income                          $ 1,897       $  --     $ 1,897
Other income                                89           5          94
Interest expense                           443          --         443
Depreciation                               415          --         415
General and administrative expense          --         103         103
Segment profit (loss)                      429         (98)        331
Total assets                            12,187         208      12,395
Capital expenditures                       173          --         173

Note F - Legal Proceedings

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial  Group,  Inc., et al. 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  the  acquisition  of  interests  in certain  Corporate
General Partner entities by Insignia  Financial  Group,  Inc. and entities which
were, at one time,  affiliates  of Insignia;  past tender offers by the Insignia
affiliates to acquire limited  partnership units; the management of partnerships
by the  Insignia  affiliates;  and the  Insignia  Merger.  The  plaintiffs  seek
monetary damages and equitable relief,  including  judicial  dissolution of your
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 have 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 final 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. The Court will entertain applications for lead
counsel which must be filed by August 4, 2000. The Court has scheduled a hearing
on  August  21,  2000 to  address  the issue of  appointing  lead  counsel.  The
Corporate  General Partner does not anticipate  that costs  associated with this
case 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.

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 properties consist of two apartment complexes. The
following  table sets forth the average  occupancy of the properties for the six
months ended June 30, 2000 and 1999:

                                                             Average
                                                            Occupancy

Property                                                2000          1999

Hickory Ridge Apartments                                94%           95%
  Memphis, Tennessee
Governor's Park Apartments                              91%           95%
  Ft. Collins, Colorado

The decrease in occupancy at  Governor's  Park  Apartments  is  attributable  to
increased competition in the local market area.

Results of Operations

The  Partnership's  net income for the three and six months  ended June 30, 2000
was   approximately   $68,000  and  $150,000,   respectively,   as  compared  to
approximately  $205,000 and $331,000,  respectively for the three and six months
ended June 30,  1999.  The  decrease in net income for both periods is due to an
increase  in total  expenses  and a slight  decrease  in total  revenues.  Total
revenues  decreased  primarily  due to a decrease  in rental  revenue  which was
partially  offset by an increase in other income.  The decrease in rental income
was due primarily to a decrease in occupancy at both  Governor's Park Apartments
and  Hickory  Ridge  Apartments  which was  partially  offset by an  increase in
average rental rates at both of the properties.  Other income increased slightly
due to an increase in late charges and  telephone  incentives  at Hickory  Ridge
Apartments.

Total  expenses  increased  during the  comparable  periods due to  increases in
operating and property tax expenses which were partially  offset by decreases in
interest and general and administrative expenses.  Depreciation expense remained
relatively  constant.  The increase in operating expense was due primarily to an
increase in courtesy  patrol  costs and property  office costs at Hickory  Ridge
Apartments  and payroll costs at both  properties.  The increase in property tax
expense was due to the City of Memphis  annexing  Hickory Ridge  Apartments into
the city limits during the last quarter of 1999. The annexation of Hickory Ridge
Apartments  resulted in the property being responsible for city taxes during the
six months ended June 30, 2000 which were not  applicable  during the six months
ended  June 30,  1999.  Interest  expense  decreased  as a result of  decreasing
balances on the mortgage principal as a result of monthly mortgage payments.

General and administrative expense decreased primarily as a result of a decrease
in legal  costs  for the  three and six month  periods  ended  June 30,  2000 as
compared  to the three and six month  periods  ended June 30,  1999,  due to the
Partnership's  portion of  settlement  costs  disclosed  in  previous  quarters.
Included  in general and  administrative  expense at both June 30, 2000 and 1999
are management reimbursements to the Corporate General Partner allowed under the
Partnership  Agreement.  In addition,  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.

As part of the ongoing business plan of the Partnership,  the Corporate  General
Partner  monitors  the  rental  market  environment  of each  of its  investment
properties  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 June 30, 2000, the Registrant had cash and cash  equivalents of approximately
$287,000 compared to approximately  $1,045,000 at June 30, 1999. The decrease in
cash and cash  equivalents  of  approximately  $187,000 for the six months ended
June 30, 2000, from the Partnership's year end, is due to approximately $316,000
of cash used in investing activities and approximately  $311,000 of cash used in
financing  activities which was partially  offset by  approximately  $440,000 of
cash  provided  by  operating  activities.  Cash  used in  financing  activities
consisted  of  principal   payments  made  on  the  mortgages   encumbering  the
Registrant's  properties,  and  distributions  to the  partners.  Cash  used  in
investing activities consisted of property improvements and replacements and, to
lesser  extent,  net  deposits to escrow  accounts  maintained  by the  mortgage
lender.  The Registrant  invests its working capital  reserves in a money market
account.

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 both of the  properties  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 both of the Registrant's properties are detailed below.

Hickory Ridge Apartments:  The Partnership has budgeted  approximately  $362,000
for  the  year  2000  for  capital  improvements,  consisting  primarily  of air
conditioning  upgrades,  floor  covering,  fencing  improvements,  and appliance
replacements.  The  Partnership  completed  approximately  $178,000  in budgeted
capital expenditures at Hickory Ridge Apartments as of June 30, 2000, consisting
primarily  of  floor  covering  replacements,   appliances  and  other  building
improvements. These improvements were funded primarily from operations.

Governor's Park Apartments:  The Partnership has budgeted approximately $112,000
for the year 2000 for capital  improvements,  consisting  primarily  of plumbing
enhancements  and appliance and floor  covering  replacements.  The  Partnership
completed   approximately   $108,000  in  budgeted  and   non-budgeted   capital
expenditures  at  Governor's  Park  Apartments  as of June 30, 2000,  consisting
primarily of plumbing enhancements, and carpet and appliance replacements. These
improvements were funded primarily from operations and replacement reserves.

The  additional  capital  improvements  planned  for  2000 at the  Partnership's
properties  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.  The  mortgage
indebtedness of approximately  $10,621,000,  net of discount,  is amortized over
varying periods with balloon payments due at maturity, March 1, 2001 and October
15,  2003.  The  Corporate  General  Partner  will  attempt  to  refinance  such
indebtedness  and/or sell the properties  prior to such maturity  dates.  If the
properties cannot be refinanced or sold for a sufficient  amount, the Registrant
will risk losing such properties through foreclosure.

In June 2000, the Partnership distributed approximately $198,000 from operations
(approximately  $11.42 per limited partnership unit) to the limited partners and
approximately  $2,000 to the general partners.  In January 1999, the Partnership
distributed  approximately  $594,000 from operations  (approximately  $34.25 per
limited  partnership unit) to the limited partners and  approximately  $6,000 to
the general  partners.  The  Registrant's  distribution  policy is reviewed on a
semi-annual  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 property sales. There can be no
assurance,  however,  that the Registrant  will generate  sufficient  funds from
operations  after  required  capital   expenditures  to  permit  any  additional
distributions to its partners in 2000 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 $200 per  apartment  unit or $37,600 in total at
Governor's Park. The reserve account is currently fully funded.

                           PART II - OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial  Group,  Inc., et al. 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  the  acquisition  of  interests  in certain  Corporate
General Partner entities by Insignia  Financial  Group,  Inc. and entities which
were, at one time,  affiliates  of Insignia;  past tender offers by the Insignia
affiliates to acquire limited  partnership units; the management of partnerships
by the  Insignia  affiliates;  and the  Insignia  Merger.  The  plaintiffs  seek
monetary damages and equitable relief,  including  judicial  dissolution of your
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 have 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 final 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. The Court will entertain applications for lead
counsel which must be filed by August 4, 2000. The Court has scheduled a hearing
on  August  21,  2000 to  address  the issue of  appointing  lead  counsel.  The
Corporate  General Partner does not anticipate  that costs  associated with this
case will be material to the Partnership's overall operations.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            a)    Exhibits:

                  Exhibit 27, Financial Data Schedule, is filed as an exhibit to
                  this report.

            b)    Reports on Form 8-K:

                  None filed during the quarter ended June 30, 2000.

                                   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:      August 9, 2000