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, 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)

                               September 30, 2000
<TABLE>
<CAPTION>

Assets

<S>                                                         <C>               <C>
   Cash and cash equivalents                                                 $   275
   Receivables and deposits                                                      186
   Restricted escrows                                                             77
   Other assets                                                                  140
   Investment properties:
      Land                                                    $  1,774
      Buildings and related personal property                   21,580
                                                                23,354

      Less accumulated depreciation                            (12,163)       11,191
                                                                            $ 11,869

Liabilities and Partners' (Deficit) Capital
Liabilities

   Accounts payable                                                         $    158
   Tenant security deposit liabilities                                            87
   Accrued property taxes                                                        125
   Other liabilities                                                             177
   Mortgage notes payable                                                     10,566

Partners' (Deficit) Capital

   General partners                                            $ (142)
   Limited partners (17,343 units issued and
      outstanding)                                                898            756
                                                                            $ 11,869

            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            Nine Months Ended
                                          September 30,                September 30,
                                     2000           1999           2000          1999
Revenues:
<S>                                 <C>           <C>            <C>           <C>
  Rental income                     $   926       $   968        $ 2,791       $ 2,865
   Other income                          84            42            196           136
       Total revenues                 1,010         1,010          2,987         3,001
Expenses:
   Operating                            400           282          1,150           920
   General and administrative            70            58            149           161
   Depreciation                         205           209            626           624
   Interest                             214           216            630           659
   Property taxes                        92            21            253            82
       Total expenses                   981           786          2,808         2,446

   Net income                        $   29        $  224         $  179        $  555
Net income allocated
   to general partners (1%)          $   --        $    2         $    2        $    6
Net income allocated
   to limited partners (99%)             29           222            177           549
                                     $   29        $  224         $  179        $  555
Net income per limited
   partnership unit                  $ 1.68        $12.80         $10.21        $31.66
Distributions per limited
   partnership unit                  $   --        $22.83         $11.42        $57.08

            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 nine months
   ended September 30, 2000                 --             2          177        179

Partners' (deficit) capital at
   September 30, 2000                   17,343       $ (142)       $ 898      $ 756


            See Accompanying Notes to Consolidated Financial Statements
</TABLE>

d)

                     SHELTER PROPERTIES VII LIMITED PARTNERSHIP
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (Unaudited)

                                   (in thousands)

<TABLE>
<CAPTION>

                                                                 Nine Months Ended
                                                                   September 30,

                                                                  2000        1999
Cash flows from operating activities:

<S>                                                           <C>          <C>
   Net income                                                 $   179      $   555
   Adjustments to reconcile net income to net
     cash provided by operating activities:
        Depreciation                                              626          624
        Amortization of discounts and loan costs                   33           34
        Change in accounts:
            Receivables and deposits                               38           19
            Other assets                                          (42)         (44)
            Accounts payable                                       85          (11)
            Tenant security deposit liabilities                     8            2
            Accrued property taxes                                (95)        (102)
            Other liabilities                                     (12)          26

               Net cash provided by operating activities          820        1,103

Cash flows from investing activities:

   Property improvements and replacements                        (612)        (385)
   Net (deposits to) withdrawals from restricted escrows          (38)          51

               Net cash used in investing activities             (650)        (334)

Cash flows from financing activities:

   Payments on mortgage notes payable                            (169)        (155)
   Distributions to partners                                     (200)        (999)

               Net cash used in financing activities             (369)      (1,154)

Net decrease in cash and cash equivalents                        (199)        (385)
Cash and cash equivalents at beginning of period                  474        1,201
Cash and cash equivalents at end of period                    $   275      $   816

Supplemental disclosure of cash flow information:

   Cash paid for interest                                     $   612      $   625

Supplemental disclosure of non-cash information:

Property improvements and replacements, accumulated depreciation and receivables
and  deposits  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>

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, 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.

<TABLE>

                                                            Nine Months Ended
                                                              September 30,
                                                           2000             1999
                                                              (in thousands)
<S>                                                       <C>             <C>
Net cash provided by operating activities                 $  820          $ 1,103
   Payments on mortgage notes payable                       (169)            (155)
   Property improvements and replacements                   (612)            (385)
   Change in restricted escrows, net                         (38)              51
   Changes in reserves for net operating
      liabilities                                             18              110
   Additional reserves                                       (19)            (724)

      Net cash used in operations                          $  --          $    --
</TABLE>

The Corporate  General Partner  reserved  approximately  $19,000 and $724,000 at
September  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 nine
months ended September 30, 2000 and 1999:

                                                          2000       1999
                                                          (in thousands)

Property management fees (included in
  operating expenses)                                     $155       $151
Reimbursements for services of affiliates
  (included in general and administrative
  and operating expenses and investment properties)         94         58

During the nine months  ended  September  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  $155,000 and $151,000 for
the nine months ended September 30, 2000 and 1999, respectively.

An  affiliate  of the  Corporate  General  Partner  received  reimbursements  of
accountable  administrative  expenses  amounting  to  approximately  $94,000 and
$58,000 for the nine months ended September 30, 2000 and 1999, respectively.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership,  AIMCO and its affiliates  currently own 10,122 limited partnership
units in the Partnership representing 58.364% 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,  which
would  include  without   limitation,   voting  on  certain  amendments  to  the
Partnership  Agreement and voting to remove the Corporate General Partner.  As a
result of its  ownership  of 58.364%  of the  outstanding  units,  AIMCO is in a
position to influence 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
their affiliation with the Corporate General Partner.

Note E - Distributions

During  the nine  months  ended  September  30,  2000,  the  Partnership  paid a
distribution of approximately  $200,000  (approximately  $198,000 to the limited
partners or $11.42 per limited  partnership  unit) from  operations.  During the
nine months ended  September 30, 1999, the  Partnership  paid a distribution  of
approximately $999,000 (approximately $990,000 to the limited partners or $57.08
per limited partnership unit) from operations.

Note F - Casualty Event

During May 2000, a large fire occurred at Hickory Ridge Apartments which damaged
five apartment  units.  It is  anticipated  that costs to repair the damage will
approximate $148,000 and that they will be covered by insurance. As of September
30, 2000 the  Partnership  does not anticipate  incurring a loss related to this
casualty.

Note G - 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,
one each 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 nine month periods  ended  September 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 September 30, 2000     Residential     Other     Total
                                                   (in thousands)
Rental income                              $   926      $   --      $  926
Other income                                    83           1          84
Interest expense                               214          --         214
Depreciation                                   205          --         205
General and administrative expense              --          70          70
Segment profit (loss)                           98         (69)         29

Nine Months Ended September 30, 2000      Residential     Other     Total
                                                   (in thousands)
Rental income                              $ 2,791      $   --      $ 2,791
Other income                                   193           3          196
Interest expense                               630          --          630
Depreciation                                   626          --          626
General and administrative expense              --         149          149
Segment profit (loss)                          325        (146)         179
Total assets                                11,786          83       11,869
Capital expenditures                           612          --          612

Three Months Ended September 30, 1999     Residential     Other     Total
                                                   (in thousands)
Rental income                              $   968       $  --      $   968
Other income                                    40           2           42
Interest expense                               216          --          216
Depreciation                                   209          --          209
General and administrative expense              --          58           58
Segment profit (loss)                          280         (56)         224

Nine Months Ended September 30, 1999      Residential     Other     Total
                                                   (in thousands)
Rental income                              $ 2,865       $  --      $ 2,865
Other income                                   129           7          136
Interest expense                               659          --          659
Depreciation                                   624          --          624
General and administrative expense              --         161          161
Segment profit (loss)                          709        (154)         555
Total assets                                12,135          75       12,210
Capital expenditures                           385          --          385

Note H - 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 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; the management of partnerships
by the  Insignia  affiliates;  and the  Insignia  Merger.  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 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 is considering applications for lead
counsel and has  currently  scheduled a hearing on the matter for  November  20,
2000. 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 nine
months ended September 30, 2000 and 1999:

                                                             Average
                                                            Occupancy

Property                                                2000          1999

Hickory Ridge Apartments                                94%           95%
  Memphis, Tennessee
Governor's Park Apartments                              92%           96%
  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 nine months ended September 30,
2000 was  approximately  $29,000  and  $179,000,  respectively,  as  compared to
approximately $224,000 and $555,000,  respectively for the three and nine months
ended  September 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 for the
nine months ended September 30, 2000. 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  due to an increase in late charges at both
Governor's Park Apartments and Hickory Ridge Apartments.

Total  expenses  increased  during the  comparable  periods due to  increases in
operating and property tax expenses which were partially offset by a decrease in
interest  expense for the three months ended September 30, 2000 and decreases in
both interest and general and administrative  expenses for the nine months ended
September 30, 2000.  Depreciation  expense remained relatively constant for both
periods.  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 nine months
ended September 30, 2000 which were not applicable  during the nine months ended
September  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 nine month period ended September 30, 2000 as compared to
the nine month period ended September 30, 1999, due to the Partnership's portion
of settlement costs disclosed in previous quarters.  This decrease was partially
offset by an increase  in  management  reimbursements  due to an increase in the
services and the cost of such services provided by the Corporate General Partner
to the  Partnership.  Included  in general  and  administrative  expense at both
September  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 both 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  September  30,  2000,  the  Registrant  had  cash and  cash  equivalents  of
approximately $275,000 compared to approximately $816,000 at September 30, 1999.
The decrease in cash and cash equivalents of approximately $199,000 for the nine
months ended  September  30, 2000,  from the  Partnership's  year end, is due to
approximately  $650,000 of cash used in investing  activities and  approximately
$369,000 of cash used in  financing  activities  which was  partially  offset by
approximately  $820,000 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 and 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 $476,000 in budgeted and
non-budgeted  capital  expenditures at Hickory Ridge  Apartments as of September
30, 2000,  consisting  primarily  of floor  covering  replacements,  appliances,
fencing improvements,  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   $136,000  in  budgeted  and   non-budgeted   capital
expenditures at Governor's Park Apartments as of September 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  $10,566,000,  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  1999,  the  Partnership
distributed  approximately  $990,000 from operations  (approximately  $57.08 per
limited  partnership unit) to the limited partners and  approximately  $9,000 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 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; the management of partnerships
by the  Insignia  affiliates;  and the  Insignia  Merger.  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 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 is considering applications for lead
counsel and has  currently  scheduled a hearing on the matter for  November  20,
2000. 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 September 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: