UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


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

For the quarterly period ended                 March 31, 2001
                               -------------------------------------------------

                                       OR

[  ]     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                         0-17589
                       ---------------------------------------------------------

                            NTS-PROPERTIES VII, LTD.
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

           Florida                                      61-1119232
--------------------------------            ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

   10172 Linn Station Road
     Louisville, Kentucky                                 40223
--------------------------------            ------------------------------------
(Address of principal executive offices)                (Zip Code)

                                 (502) 426-4800
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months,  and (2) has been subject to such filing  requirements
for the past 90 days.
                                                                  [X] Yes [ ] No


<PAGE>



                                TABLE OF CONTENTS
                                -----------------

                                     PART I
                                     ------

                                                                           Pages
                                                                           -----

Item 1.    Financial Statements

           Balance Sheets as of March 31, 2001 and December 31, 2000       3

           Statement of Partners' Equity as of March 31, 2001              3

           Statements of Operations for the Three Months Ended
                    March 31, 2001 and 2000                                4

           Statements of Cash Flows for the Three Months Ended
                    March 31, 2001 and 2000                                5

           Notes to Financial Statements                                   6-10

Item 2.    Management's Discussion and Analysis of Financial Condition
                    and Results of Operations                              11-15

Item 3.    Quantitative and Qualitative Disclosures About Market Risk      16

                                     PART II
                                     -------

Item 1.    Legal Proceedings                                               17

Item 2.    Changes in Securities                                           17

Item 3.    Defaults Upon Senior Securities                                 17

Item 4.    Submission of Matters to a Vote of Security Holders             17

Item 5.    Other Information                                               17

Item 6.    Exhibits and Reports on Form 8-K                                17

Signatures                                                                 18


                                        2


<PAGE>



PART I.   FINANCIAL INFORMATION
          ---------------------
Item 1.   Financial Statements
          --------------------

<TABLE>

                                                      NTS-PROPERTIES VII, LTD.
                                                      ------------------------
                                                           BALANCE SHEETS
                                                           --------------

<CAPTION>

                                                                             As of                    As of
                                                                         March 31, 2001         December 31, 2000*
                                                                     ----------------------   ----------------------
                                                                          (UNAUDITED)
<S>                                                                 <C>                      <C>
ASSETS
------
Cash and equivalents                                                $               411,395  $               307,173
Cash and equivalents - restricted                                                    25,425                   26,175
Accounts receivable                                                                     955                   62,978
Land, buildings and amenities, net                                                7,996,222                8,088,455
Investment in and advances to joint venture                                         519,664                  446,072
Other assets                                                                         70,002                   73,641
                                                                     ----------------------   ----------------------

     TOTAL ASSETS                                                   $             9,023,663  $             9,004,494
                                                                     ======================   ======================

LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Mortgage and notes payable                                          $             3,775,247  $             3,756,533
Accounts payable                                                                     38,458                   14,438
Security deposits                                                                    26,200                   25,325
Other liabilities                                                                    35,121                   13,413
                                                                     ----------------------   ----------------------

     TOTAL LIABILITIES                                                            3,875,026                3,809,709

COMMITMENTS AND CONTINGENCIES (Note 9)

PARTNERS' EQUITY                                                                  5,148,637                5,194,785
                                                                     ----------------------   ----------------------

TOTAL LIABILITIES AND PARTNERS' EQUITY                              $             9,023,663  $             9,004,494
                                                                     ======================   ======================

</TABLE>


<TABLE>

                                                    STATEMENT OF PARTNERS' EQUITY
                                                    -----------------------------

<CAPTION>

                                                    Limited Partners         General Partner               Total
                                                 ----------------------   ----------------------   ----------------------
<S>                                             <C>                      <C>                      <C>
PARTNERS' EQUITY/(DEFICIT)
--------------------------
Capital contributions, net of  offering costs   $            10,935,700  $                   100  $            10,935,800
Net loss - prior years                                       (2,540,780)                 (25,664)              (2,566,444)
Net loss - current year                                         (45,687)                    (461)                 (46,148)
Cash distributions declared to date                          (2,717,046)                 (27,445)              (2,744,491)
Repurchase of limited partnership Units                        (430,080)                      --                 (430,080)
                                                 ----------------------   ----------------------   ----------------------

BALANCES AT MARCH 31, 2001                      $             5,202,107  $               (53,470) $             5,148,637
                                                 ======================   ======================   ======================

</TABLE>


*    Reference is made to the audited financial statements in Form 10-K as filed
     with the Securities and Exchange Commission on April 2, 2001.

The  accompanying  notes to financial  statements  are an integral part of these
statements.


                                        3


<PAGE>



<TABLE>

                                                      NTS-PROPERTIES VII, LTD.
                                                      ------------------------
                                                      STATEMENTS OF OPERATIONS
                                                      ------------------------
                                                             (UNAUDITED)
                                                             -----------

<CAPTION>

                                                                                       Three Months Ended
                                                                                            March 31,
                                                                         -----------------------------------------------
                                                                                  2001                     2000
                                                                         ----------------------   ----------------------
<S>                                                                     <C>                      <C>
REVENUES
--------
Rental income                                                           $               379,365  $               386,913
Interest and other income                                                                 4,511                    7,528
Income on investment in joint venture                                                    18,293                    6,977
Gain on sale of assets                                                                       --                    4,118
                                                                         ----------------------   ----------------------

     TOTAL REVENUES                                                                     402,169                  405,536
                                                                         ----------------------   ----------------------

EXPENSES
--------
Operating expenses                                                                       93,591                   76,431
Operating expenses - affiliated                                                          58,840                   53,453
Loss on disposal of assets                                                               43,685                   19,843
Interest expense                                                                         68,044                   71,286
Management fees                                                                          19,827                   20,073
Real estate taxes                                                                        22,452                   22,828
Professional and administrative expenses                                                 19,667                   30,763
Professional and administrative
   expenses - affiliated                                                                 24,284                   19,592
Depreciation and amortization                                                            97,927                   94,123
                                                                         ----------------------   ----------------------

     TOTAL EXPENSES                                                                     448,317                  408,392
                                                                         ----------------------   ----------------------

Net loss                                                                $               (46,148) $                (2,856)
                                                                         ======================   ======================

Net loss allocated to the limited partners                              $               (45,687) $                (2,827)
                                                                         ======================   ======================

Net loss per limited partnership Unit                                   $                (0.08)  $                 (0.01)
                                                                         ======================   ======================

Weighted average number of limited partnership Units                                    553,236                  555,736
                                                                         ======================   ======================

</TABLE>


The  accompanying  notes to financial  statements  are an integral part of these
statements.


                                        4


<PAGE>



<TABLE>

                                                      NTS-PROPERTIES VII, LTD.
                                                      ------------------------
                                                      STATEMENTS OF CASH FLOWS
                                                      ------------------------
                                                             (UNAUDITED)
                                                             -----------

<CAPTION>

                                                                                                  Three Months Ended
                                                                                                       March 31,
                                                                                         -------------------------------------
                                                                                               2001                 2000
                                                                                         -----------------    ----------------
<S>                                                                                    <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES
------------------------------------
Net loss                                                                               $           (46,148) $           (2,856)
Adjustments to reconcile net loss to net cash provided by operating activities:
    Loss on disposal of assets                                                                      43,685              19,843
    Gain on sale of assets                                                                              --              (4,118)
    Depreciation and amortization                                                                   98,706              94,895
    Income from investment in joint venture                                                        (18,293)             (6,977)
    Changes in assets and liabilities:
      Cash and equivalents - restricted                                                                750               2,574
      Accounts receivable                                                                           62,023              77,034
      Other assets                                                                                   2,859             (24,538)
      Accounts payable                                                                              24,020               4,708
      Security deposits                                                                                875                (125)
      Other liabilities                                                                             21,708              17,646
                                                                                         -----------------    ----------------

     Net cash provided by operating activities                                                     190,185             178,086

CASH FLOWS FROM INVESTING ACTIVITIES
------------------------------------
Proceeds from sale of assets                                                                            --               6,934
Additions to land, buildings and amenities                                                         (49,378)            (67,452)
Investment in and advances to joint venture                                                        (55,299)            (67,700)
                                                                                         -----------------    ----------------

     Net cash used in investing activities                                                        (104,677)           (128,218)

CASH FLOWS FROM FINANCING ACTIVITIES
------------------------------------
Proceeds from mortgage loan and notes payable                                                       51,060                  --
Principal payment on mortgage payable                                                              (32,346)            (29,499)
Cash distributions                                                                                      --             (28,067)
                                                                                         -----------------    ----------------

     Net cash provided by (used in) financing activities                                            18,714             (57,566)

     Net increase (decrease) in cash and equivalents                                               104,222              (7,698)

CASH AND EQUIVALENTS, beginning of period                                                          307,173             396,110
                                                                                         -----------------    ----------------

CASH AND EQUIVALENTS, end of period                                                    $           411,395  $          388,412
                                                                                         =================    ================

Interest paid on a cash basis                                                          $            68,835  $           71,673
                                                                                         =================    ================

</TABLE>


The  accompanying  notes to financial  statements  are an integral part of these
statements.


                                        5


<PAGE>




                            NTS-PROPERTIES VII, LTD.
                          NOTES TO FINANCIAL STATEMENTS

The unaudited financial statements included herein should be read in conjunction
with  NTS-Properties VII, Ltd's (the "Partnership") 2000 Form 10-K as filed with
the Securities  and Exchange  Commission on April 2, 2001. In the opinion of the
General Partner,  all adjustments (only consisting of normal recurring accruals)
necessary for a fair presentation  have been made to the accompanying  financial
statements for the three months ended March 31, 2001 and 2000.

1.        Consolidation Policy and Joint Venture Accounting
          -------------------------------------------------

          The  consolidated  financial  statements  include the  accounts of all
          wholly-owned properties.  Intercompany  transactions and balances have
          been  eliminated.  The less than 50% owned joint  venture is accounted
          for under the equity method.

          From inception,  the Partnership used the proportionate  consolidation
          method of accounting for joint venture  properties.  The Partnership's
          proportionate  interest in the joint  venture's  assets,  liabilities,
          revenues,  expenses  and cash flows were  combined  on a  line-by-line
          basis  with  the  Partnership's  own  assets,  liabilities,  revenues,
          expenses and cash flows.  All  intercompany  accounts and transactions
          were eliminated in consolidation.

          Proportionate consolidation was utilized by the Partnership due to the
          fact that the ownership of joint venture properties, in substance, was
          not subject to joint  control.  The managing  General  Partners of the
          sole  General  Partner of the NTS  sponsored  partnerships  which have
          formed joint ventures are substantially  the same. As such,  decisions
          regarding financing,  development,  sale or operations did not require
          the approval of different partners.

          Additionally,   the  joint   venture   properties   are  in  the  same
          business/industry as their respective joint venture partners and their
          asset,  liability,  revenue and expense  accounts  correspond with the
          accounts of such partner.  It is the belief of the General  Partner of
          the Partnership  that the financial  statement  disclosures  resulting
          from   proportionate   consolidation   provided  the  most  meaningful
          presentation of assets, liabilities, revenues, expenses and cash flows
          given the commonality of the Partnership's operations.

          The Emerging  Issues Tasks Force ("EITF") of the Financial  Accounting
          Standards  Board  ("FASB")  has reached a consensus on Issue No. 00-1,
          "Applicability  of the Pro Rata Method of Consolidation to Investments
          in Certain  Partnerships and Other Unincorporated Joint Ventures." The
          EITF  reached  a  consensus  that  a  proportionate   gross  financial
          statement presentation  (referred to as "proportionate  consolidation"
          in the Notes to Consolidated  Financial Statements) is not appropriate
          for an investment in an  unincorporated  legal entity accounted for by
          the equity method of accounting,  unless the investee is in either the
          construction  industry  or an  extractive  industry  where  there is a
          longstanding practice of its use.


                                       6


<PAGE>



1.        Consolidation Policy and Joint Venture Accounting - Continued
          -------------------------------------------------------------

          The consensus is applicable to financial statements for annual periods
          ending after June 15, 2000. The Partnership has used the equity method
          to account  for its joint  venture  investments  for the three  months
          ending March 31, 2001.  The  Partnership  has applied the consensus to
          all comparative financial  statements,  restating them to conform with
          the  consensus  for all periods  presented.  The  application  of this
          consensus  did not  result in a  restatement  of  previously  reported
          partners'  equity  or  results  of  operations,  but did  result  in a
          recharacterization    or   reclassification   of   certain   financial
          statements' captions and amounts.

2.        Use of Estimates in the Preparation of Financial Statements
          -----------------------------------------------------------

          The  preparation of financial  statements in conformity with Generally
          Accepted  Accounting  Principles  ("GAAP") requires management to make
          estimates and assumptions  that affect the reported  amounts of assets
          and liabilities and disclosure of contingent assets and liabilities at
          the date of the  financial  statements  and the  reported  amounts  of
          revenues and expenses  during the  reporting  period.  Actual  results
          could differ from those estimates.

3.        Concentration of Credit Risk
          ----------------------------

          NTS-Properties VII, Ltd. owns and operates, through a joint venture, a
          commercial  rental property in Louisville,  Kentucky.  The sole tenant
          which occupies 100% of the property is a business which has operations
          in the  Louisville  area.  The  Partnership  also  owns  and  operates
          residential properties in Louisville and Lexington, Kentucky.

4.        Cash and Equivalents - Restricted
          ---------------------------------

          Cash and  equivalents  -  restricted  represents  funds  received  for
          residential  security deposits and funds which have been escrowed with
          mortgage  companies  for property  taxes in  accordance  with the loan
          agreements.

5.        Basis of Property and Depreciation
          ----------------------------------

          Land,  buildings and amenities  are stated at  historical  cost,  less
          accumulated   depreciation,   to  the   Partnership.   Costs  directly
          associated with the  acquisition,  development  and  construction of a
          project  are   capitalized.   Depreciation   is  computed   using  the
          straight-line  method over the  estimated  useful  lives of the assets
          which are 7-30 years for land  improvements,  5-30 years for buildings
          and improvements  and 5-30 years for amenities.  The aggregate cost of
          the Partnership's properties for federal tax purposes is approximately
          $12,645,000.

          Statement  of  Financial   Accounting   Standards  ("SFAS")  No.  121,
          "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
          Assets to be Disposed Of,"  specifies  circumstances  in which certain
          long-lived  assets must be reviewed  for  impairment.  If the carrying
          amount of an asset exceeds the sum of its expected  future cash flows,
          the  asset's  carrying  value  must be  written  down  to fair  value.
          Application  of this standard by  management  during the periods ended
          March 31, 2001 and 2000 did not result in any impairment loss.


                                        7


<PAGE>



6.        Investment in Joint Venture
          ---------------------------

          Blankenbaker  Business Center Joint Venture (the "Joint  Venture') was
          organized  on December  28,  1990,  by  NTS-Properties  VII,  Ltd. and
          NTS-Properties  Plus Ltd.  to own and  operate  Blankenbaker  Business
          Center 1A and to acquire an  approximately  2.49 acre parking lot that
          was being  leased by the  business  center  from an  affiliate  of the
          General Partner. On August 16, 1994, the Blankenbaker  Business Center
          Joint Venture agreement was amended to admit  NTS-Properties IV to the
          Joint Venture.

          For the  three  months  ended  March 31,  2001 and 2000,  Blankenbaker
          Business  Center 1A had total  revenues  of  $238,497  and  $200,177,
          respectively, and net income of $65,954 and $29,873, respectively.

7.        Mortgage and Notes Payable
          --------------------------

          Mortgage and notes payable consist of the following:

<TABLE>

                                                                  March 31, 2000             December 31, 2000
                                                             ------------------------     ------------------------
          <S>                                             <C>                           <C>
          Mortgage payable to an insurance company,
          bearing interest at a fixed rate of
          7.37%, due October 15, 2012,
          secured by land and buildings.                  $                3,724,187    $                3,756,533

          Note payable to a bank, bearing interest
          at the Prime Rate, due March 27, 2003.
          At March 31, 2001, the interest rate was
          approximately 8.50%.                                                38,148                            --

          Note payable to a bank, bearing interest
          at the Prime Rate, due March 27, 2003.
          At March 31, 2001, the interest rate
          was approximately 8.50%.                                            12,912                            --
                                                             ------------------------     ------------------------

                                                           $                3,775,247   $                3,756,533
                                                             ========================     ========================

</TABLE>


          Based on the borrowing  rates  currently  available to the Partnership
          for  mortgages  with similar  terms and average  maturities,  the fair
          value of long-term debt is approximately $3,862,000.

          On March 27, 2001, Park Place  Apartments Phase II and The Park at the
          Willows both obtained notes payable to a bank in the amount of $38,148
          and $12,912, respectively.  Both notes bear interest at the Prime Rate
          and are due on March 27,  2003.  The notes were  obtained to cover the
          costs of installing a water meter system at the apartments.

8.        Related Party Transactions
          --------------------------

          Pursuant  to  an  agreement  with  the  Partnership,  NTS  Development
          Company,  an  affiliate  of the  General  Partner of the  Partnership,
          receives  property  management  fees on a monthly basis.  The fees are
          paid  in an  amount  equal  to 5%  of  the  gross  revenues  from  the
          Partnership's  residential properties.  Also pursuant to an agreement,
          NTS Development Company receives a repair and maintenance fee equal to
          5.9% of costs  incurred  which relate to capital  improvements.  These
          repair and maintenance fees are capitalized as part of land, buildings
          and amenities.


                                        8


<PAGE>



8.        Related Party Transactions - Continued
          --------------------------------------

          The Partnership was charged the following amounts from NTS Development
          Company for the three  months  ended  March 31,  2001 and 2000.  These
          charges include items which have been expensed as operating expenses -
          affiliated or professional  and  administrative  expenses - affiliated
          and items  which  have been  capitalized  as other  assets or as land,
          buildings and amenities.


<TABLE>

                                                                                   Three Months Ended
                                                                                       March 31,
                                                                       ------------------------------------------
                                                                              2001                    2000
                                                                       -------------------     ------------------
<S>                                                                  <C>                    <C>
Property management fees                                             $              19,827  $              20,073
                                                                       -------------------     ------------------

Property management                                                                 34,964                 30,607
Leasing                                                                              6,398                  5,554
Administrative - operating                                                          17,120                 17,101
Other                                                                                  358                    191
                                                                       -------------------     ------------------

     Total operating expenses - affiliated                                          58,840                 53,453
                                                                       -------------------     ------------------

Professional and administrative expenses - affiliated                               24,284                 19,592
                                                                       -------------------     ------------------

Repairs and maintenance fee                                                          1,436                  2,422
Construction management                                                                 --                      4
                                                                       -------------------     ------------------

     Total related party transactions capitalized                                    1,436                  2,426
                                                                       -------------------     ------------------

     Total related party transactions                                $             104,387  $              95,544
                                                                       ===================     ==================

</TABLE>


          On February 7, 2000, ORIG, LLC (the "Affiliate")  purchased  Interests
          in the  Partnership  and  pursuant to an  Agreement,  Bill of Sale and
          Assignment  by and  among  the  Affiliate  and four  investors  in the
          Partnership (the "Purchase Agreement").  The Affiliate purchased 2,251
          Interests in the Partnership for a total  consideration  of $15,082 or
          an  average  price of $6.70 per  Interest.  The  Affiliate  paid these
          investors a premium above the purchase  price  previously  offered for
          Interests  pursuant  to prior  tender  offers  because  this  purchase
          allowed the  Affiliate  to purchase  substantial  numbers of Interests
          without  incurring  the  significant  expenses  involved with a tender
          offer and multiple transfers.

9.        Commitments and Contingencies
          -----------------------------

          The  Partnership,  as an owner of real  estate,  is subject to various
          environmental  laws  of the  federal,  state  and  local  governments.
          Compliance  by the  Partnership  with  existing  laws  has  not  had a
          material effect on the Partnership's  financial  condition and results
          of operations.  However,  the Partnership cannot predict the impact of
          new or changed laws or  regulations  on its current  properties  or on
          properties that it may acquire in the future.

          The  Partnership  does not believe there is any litigation  threatened
          against the Partnership other than routine  litigation  arising out of
          the  ordinary  course of  business,  some of which is  expected  to be
          covered by  insurance,  none of which is  expected  to have a material
          effect on the  balance  sheets and  statements  of  operations  of the
          Partnership except as discussed herein.


                                        9


<PAGE>



9.        Commitments and Contingencies - Continued
          -----------------------------------------

          The  Partnership  plans to replace the roofs at Park Place  Apartments
          Phase II (17  buildings)  all of which were  installed  using shingles
          produced  by a single  manufacturer.  The  shingles  appear to contain
          defects  which may cause the roofs to fail.  As the  manufacturer  has
          declared  bankruptcy,  the  Partnership  does not expect to be able to
          recover any of the costs of the roof  replacements in the event of any
          such  failures.  The  Partnership  does  not have  sufficient  working
          capital to make the roof  replacements.  The total costs of  replacing
          all of the roofs is estimated to be $340,000  ($20,000 per  building).
          As of March 31, 2001, no roof replacements have been started.

10.       Segment Reporting
          -----------------

          The  Partnership's  reportable  operating  segments  include  only one
          segment - Residential Real Estate Operations.

11.       Subsequent Event
          ----------------

          On May 14, 2001, the  Partnership  and ORIG,  LLC, an affiliate of the
          Partnership (the "Offerors"), filed a fourth tender offer (the "Fourth
          Tender  Offer")  with  the  Securities  and  Exchange  Commission,  to
          purchase up to 2,000 of the Partnership's limited partnership Units at
          a price of $6.00 per Unit as of the date of the Fourth  Tender  Offer.
          Approximately   $22,000   ($12,000  to   purchase   2,000  Units  plus
          approximately  $10,000 for expenses  associated with the Fourth Tender
          Offer) is required  to purchase  all 2,000  Units.  The Fourth  Tender
          Offer stated that the Partnership  will purchase the first 1,000 Units
          tendered  and will fund its  purchase  and its portion of the expenses
          from cash flow from operations. If more that 1,000 Units are tendered,
          ORIG, LLC will purchase up to an additional  1,000 Units. If more than
          2,000  Units are  tendered,  the  Offerors  may choose to acquire  the
          additional  Units  on  a  pro  rata  basis.   Units  acquired  by  the
          Partnership will be retired. Units that are acquired by ORIG, LLC will
          be held by it. The General  Partner,  NTS-Properties  Associates  VII,
          does not intend to participate in the Fourth Tender Offer.  The Fourth
          Tender Offer will expire on August 14, 2001 unless extended.


                                       10


<PAGE>



Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations
         -------------

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  ("MD&A") is  structured  in four major  sections.  The first section
provides  information  related to  occupancy  levels and rental and other income
generated  by the  Partnership's  properties.  The  second  analyzes  results of
operations on a consolidated basis. The final sections address consolidated cash
flows and  financial  condition.  A  discussion  of  certain  market  risks also
follows.  MD&A should be read in  conjunction  with the Financial  Statements in
Item 1 and the Cautionary Statements below.

Cautionary Statements
---------------------

Some  of  the  statements  included  in  this  Item 2 may  be  considered  to be
"forward-looking  statements" since such statements relate to matters which have
not yet occurred.  For example,  phrases such as "the Partnership  anticipates,"
"believes"  or   "expects,"   indicate  that  it  is  possible  that  the  event
anticipated,  believed or expected  may not occur.  Should such event not occur,
then the result which the Partnership  expected also may not occur or occur in a
different  manner,  which may be more or less favorable to the Partnership.  The
Partnership does not undertake any obligations to publicly release the result of
any revisions to these  forward-looking  statements  that may be made to reflect
any future events or circumstances.

Any  forward-looking  statements  included in MD&A, or elsewhere in this report,
which reflect management's best judgement, based on factors known, involve risks
and uncertainties. Actual results could differ materially from those anticipated
in any  forward-looking  statements as a result of a number of factors including
but not  limited  to those  discussed  below.  Any  forward-looking  information
provided by the  Partnership  pursuant to the safe harbor  established by recent
securities legislation should be evaluated in the context of these factors.

The  Partnership's  liquidity,  capital  resources and results of operations are
subject to a number of risks and uncertainties including, but not limited to the
following:  the ability of the  Partnership  to achieve  planned  revenues;  the
ability of the Partnership to make payments due under its debt  agreements;  the
ability of the  Partnership  to negotiate  and  maintain  terms with vendors and
service providers for operating expenses;  competitive pressures from other real
estate  companies,  including  large  commercial  and  residential  real  estate
companies,  which may  affect  the nature  and  viability  of the  Partnership's
business  strategy;  trends in the economy as a whole which may affect  consumer
confidence and demand for the types of rental property held by the  Partnership;
the  ability of the  Partnership  to predict  the  demand  for  specific  rental
properties;  the  ability  of the  Partnership  to attract  and retain  tenants;
availability  and costs of management and labor employed;  real estate occupancy
and  development  costs,   including  the  substantial  fixed  investment  costs
associated with renovations  necessary to obtain new tenants and retain existing
tenants;  and the risk of a major commercial  tenant defaulting on its lease due
to risks  generally  associated  with real estate,  many of which are beyond the
control of the  Partnership,  including  general or local  economic  conditions,
competition, interest rates, real estate tax rates, other operating expenses and
acts of God.


                                       11


<PAGE>



Investment in Joint Ventures
----------------------------

The Emerging Issues Tasks Force ("EITF") of the Financial  Accounting  Standards
Board ("FASB") has reached a consensus on Issue No. 00-1,  "Applicability of the
Pro Rata Method of  Consolidation  to  Investments in Certain  Partnerships  and
Other  Unincorporated  Joint  Ventures."  The EITF  reached a  consensus  that a
proportionate   gross   financial   statement   presentation   (referred  to  as
"proportionate consolidation" in the Notes to Consolidated Financial Statements)
is not appropriate for an investment in an unincorporated legal entity accounted
for by the equity  method of  accounting,  unless the  investee is in either the
construction  industry or an extractive  industry  where there is a longstanding
practice of its use.

The consensus is applicable to financial  statements  for annual  periods ending
after June 15, 2000. The  Partnership  has used the equity method to account for
its joint venture  investments  for the three months ending March 31, 2001.  The
Partnership has applied the consensus to all comparative  financial  statements,
restating  them to conform with the  consensus  for all periods  presented.  The
application  of this  consensus  did not result in a  restatement  of previously
reported  partners'  equity  or  results  of  operations,  but did  result  in a
recharacterization or reclassification of certain financial statements' captions
and amounts.

Results of Operations
---------------------

The occupancy  levels at the  Partnership's  properties  and joint venture as of
March 31 were as follows:


<TABLE>

                                                                                  Three Months Ended March 31,
                                                                         -----------------------------------------------
                                                                                2001                        2000
                                                                         -------------------         -------------------
<S>                                                                              <C>                         <C>
Wholly-Owned Properties
-----------------------

The Park at the Willows                                                          90%                         73%
Park Place Apartments Phase II (1)                                               75%                         83%

Property Owned in Joint Venture with NTS-Properties IV and NTS-
---------------------------------------------------------------
Properties Plus, Ltd. (Ownership % at March 31, 2001)
-----------------------------------------------------

Blankenbaker Business Center 1A (31.34%)                                        100%                        100%

</TABLE>


(1)  In the opinion of the General Partner of the  Partnership,  the decrease in
     occupancy  is  only a  temporary  fluctuation  and  does  not  represent  a
     permanent downward occupancy trend.

The average occupancy levels at the  Partnership's  properties and joint venture
during the three months ended March 31 were as follows:


<TABLE>

                                                                                         Three Months Ended March 31,
                                                                              ---------------------------------------------------
                                                                                      2001                          2000
                                                                              ---------------------         ---------------------
<S>                                                                                    <C>                           <C>
Wholly-Owned Properties
-----------------------

The Park at the Willows                                                                92%                           72%
Park Place Apartments Phase II (1)                                                     76%                           82%

Property Owned in Joint Venture with NTS-Properties IV and NTS-
---------------------------------------------------------------
Properties Plus, Ltd. (Ownership % at March 31, 2001)
-----------------------------------------------------

Blankenbaker Business Center 1A (31.34%)                                              100%                          100%

</TABLE>


(1)  In the opinion of the General Partner of the  Partnership,  the decrease in
     average occupancy is only a temporary  fluctuation and does not represent a
     permanent downward occupancy trend.


                                       12


<PAGE>



Results of Operations - Continued
---------------------------------

Rental and other income  generated  by the  Partnership's  properties  and joint
venture for the three months ended March 31 were as follows:


<TABLE>

                                                                                     Three Months Ended March 31,
                                                                            -----------------------------------------------
                                                                                     2001                       2000
                                                                            ---------------------      --------------------
<S>                                                                        <C>                        <C>
Wholly-Owned Properties
-----------------------

The Park at the Willows                                                    $               90,506     $              70,170
Park Place Apartments Phase II                                             $              290,180     $             322,483

Property Owned in Joint Venture with NTS-Properties IV and NTS-
---------------------------------------------------------------
Properties Plus, Ltd. (Ownership % at March 31, 2001)
-----------------------------------------------------

Blankenbaker Business Center 1A (31.34%)                                   $              238,497     $             200,177

</TABLE>


Current  occupancy  levels are considered  adequate to continue the operation of
the Partnership's  properties without the need of any additional financing.  See
the  Consolidated  Cash Flows and  Financial  Condition  section of Item 2 for a
discussion  regarding the cash  requirements of the  Partnership's  current debt
financings.

The  following is an analysis of material  changes in the results of  operations
for the  periods  ending  March  31,  2001 and 2000.  Items  that did not have a
material  impact on operations  for the periods  listed above have been excluded
from this discussion.

Income from investment in joint venture increased  approximately $11,000 for the
three  months  ended  March 31,  2001,  as  compared to the same period in 2000,
mainly as a result of increased rental income collected at Blankenbaker Business
Center  1A due to  increased  common  area  maintenance  reimbursed  by the sole
tenant.

Operating expenses increased approximately $17,000, or 23%, for the three months
ended March 31, 2001, as compared to the same period in 2000, mainly as a result
of increased advertising costs, utilities and landscaping expenses at Park Place
Apartments Phase II. The increase is partially  offset by decreased  repairs and
maintenance costs at Park at the Willows.

Operating expenses - affiliated increased  approximately $5,000, or 10%, for the
three  months  ended  March 31,  2001,  as  compared to the same period in 2000,
mainly as a result of increased property management salaries.

The loss on disposal  of assets of  approximately  $44,000 for the three  months
ended March 31, 2001, is due to retiring assets for Park Place  Apartments Phase
II, that were not fully  depreciated,  as a result of an exterior repair project
completed in 2001. The loss on disposal of assets of  approximately  $20,000 for
the three months ended March 31, 2000 is due to retiring  assets for Park at the
Willows,  that were not fully  depreciated,  as a result of an  exterior  repair
project completed in 2000.


                                       13


<PAGE>



Results of Operations - Continued
---------------------------------

Professional and administrative  expenses decreased  approximately  $11,000,  or
36%, for the three  months  ended March 31,  2001,  as compared to the same time
period  in  2000.  This  decrease  is  primarily  due to 1)  decreased  external
processing  costs,  2) decreased  printing  costs  associated  with tender offer
filings and 3) decreased  legal and  professional  fees  associated  with tender
offer filings.

Consolidated Cash Flows and Financial Condition
-----------------------------------------------

Cash flows provided by (used in):

<TABLE>

                                                                                   Three Months Ended March 31,
                                                                       ----------------------------------------------------
                                                                                2001                          2000
                                                                       -----------------------        ---------------------
<S>                                                                   <C>                            <C>
Operating activities                                                  $                190,185       $              178,086
Investing activities                                                                  (104,677)                    (128,218)
Financing activities                                                                    18,714                      (57,566)
                                                                       -----------------------        ---------------------

     Net increase (decrease) in cash and equivalents                  $                104,222       $               (7,698)
                                                                       =======================        =====================

</TABLE>


Net cash provided by operating  activities increased  approximately  $13,000, or
7%, for the three months ended March 31, 2001, as compared to the same period in
2000.  The increase was driven  primarily by accounts  payable and was partially
offset by increased net loss.

The decrease in net cash used in investing activities for the three months ended
March 31, 2001, as compared to the same period in 2000, was mainly the result of
decreased  capital  expenditures  for Park Place Apartments Phase II and Park at
the Willows, and decreased investment in the joint venture property.

The increase in net cash provided by financing  activities  for the three months
ended March 31, 2001, as compared to the same period in 2000,  was mainly due to
proceeds from two notes  payable  obtained in March 2001 (see Note 7 for further
detail  on  notes  payable)  and to the  discontinuance  of  cash  distributions
starting in the fourth quarter of 2000.

On January 24, 2001, the Partnership notified its limited partners that it would
be  suspending   distributions  starting  with  the  fourth  quarter  2000.  The
suspension was necessary to build up cash reserves in  contemplation of the roof
replacements  at  Park  Place  Apartments  Phase  II  (mentioned  below).   Once
sufficient  reserves are  accumulated,  management  (the General  Partner)  will
review cash,  working  capital levels and  projections for their use, and resume
distributions if appropriate.

During the three  months ended March 31, 2000,  the  Partnership  used cash flow
from operations and cash on hand to declare a 1% (annualized)  cash distribution
of $28,067.  The annualized  distribution rate is calculated as a percent of the
original capital contribution. The limited partners received 99% and the General
Partner  received  1% of these  distributions.  The  primary  source  of  future
liquidity and distributions is expected to be derived from cash generated by the
Partnership's properties after adequate cash reserves are established for future
leasing,  renovations and tenant finish costs.  It is anticipated  that the cash
flows from  operations and cash reserves will be sufficient to meet the needs of
the Partnership.  Cash reserves (which are unrestricted  cash and equivalents as
shown on the Partnership's balance sheet) were $411,395 at March 31, 2001.


                                       14


<PAGE>



Consolidated Cash Flows and Financial Condition - Continued
-----------------------------------------------------------

The table below  presents  that portion of the  distributions  that  represent a
return of capital on a GAAP basis for the three  months ended March 31, 2001 and
2000.


<TABLE>

                                                         Net Income             Cash Distributions               Return of
                                                         Allocated                   Declared                     Capital
                                                    --------------------      ----------------------       ---------------------
Limited Partners:
                      <S>                        <C>                       <C>                          <C>
                      2001                       $               (45,687)  $                      --    $                     --
                      2000                       $                (2,827)  $                  27,787    $                 27,787

General Partner:
                      2001                       $                   461   $                      --    $                     --
                      2000                       $                   (29)  $                     280    $                    280

</TABLE>


The demand on future  liquidity  is  anticipated  to increase as a result of the
replacement of the roofs at Park Place Apartments Phase II (17 buildings) all of
which were  installed  using  shingles  produced by a single  manufacturer.  The
shingles  appear to contain  defects  which may cause the roofs to fail.  As the
manufacturer has declared bankruptcy, the Partnership does not expect to be able
to recover  any of the costs of the roof  replacements  in the event of any such
failures.  The Partnership does not have sufficient  working capital to make all
of the roof  replacements.  The  total  costs of  replacing  all of the roofs is
estimated to be $340,000  ($20,000 per building).  As of March 31, 2001, no roof
replacements have been started. The Partnership  anticipated  beginning the roof
replacements  in the third  quarter of 2001 and  replacing the roofs on three to
four buildings per year.

In an  effort to  continue  to  improve  occupancy  levels at the  Partnership's
residential  properties,  the Partnership has an on-site leasing staff,  who are
employees of NTS Development Company, at each of the apartment communities.  The
staff  handles all on-site  visits from  potential  tenants,  coordinates  local
advertising  with NTS Development  Company's  marketing  staff,  makes visits to
local  companies to promote fully  furnished  apartments  and works with current
residents on lease renewals.

The  lease at  Blankenbaker  Business  Center  1A  provides  for the  tenant  to
contribute toward the payment of common area expenses, insurance and real estate
taxes.  This lease provision,  along with the fact that  residential  leases are
generally for a period of one year, should protect the Partnership's  operations
from the impact of inflation and changing prices.


                                       15


<PAGE>



Item 3.    Quantitative and Qualitative Disclosures About Market Risk
           ----------------------------------------------------------

Our primary risk  exposure  with regard to financial  instruments  is changes in
interest  rates.  Two of the  Partnership's  notes  payable bear interest at the
Prime Rate. The  Partnership's  mortgage payable bears interest at a fixed rate.
At March 31, 2001, a  hypothetical  100 basis point  increase in interest  rates
would result in  approximately  $500 additional  annual interest  expense on the
variable rate notes. The same increase in interest rates would also result in an
approximate $274,744 decrease in the fair value of debt.









                                       16


<PAGE>



PART II.          OTHER INFORMATION
                  -----------------

Item 1.           Legal Proceedings
                  -----------------

                  Not applicable.

Item 2.           Changes in Securities
                  ---------------------

                  Not applicable.

Item 3.           Defaults Upon Senior Securities
                  -------------------------------

                  Not applicable.

Item 4.           Submission of Matters to a Vote of Security Holders
                  ---------------------------------------------------

                  Not applicable.

Item 5.           Other Information
                  -----------------

                  Not applicable.

Item 6.           Exhibits and Reports on Form 8-K
                  --------------------------------

                  a)       Reports on Form 8-K:

                           Not applicable.


                                       17


<PAGE>


                                   SIGNATURES
                                   ----------

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                              NTS-PROPERTIES VII, LTD.
                               -------------------------------------------------
                                                  (Registrant)

                               By:      NTS-Properties Associates VII,
                                        General Partner
                                        By:      NTS Capital Corporation,
                                                 General Partner



                               /s/ Gregory A. Wells
                               -------------------------------------------------
                               Gregory A. Wells
                               Senior Vice President and
                               Chief Financial Officer of
                               NTS Capital Corporation


Date: May 15, 2001










                                       18