<PAGE>
 
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549


                                   FORM 10-Q

               Quarterly Report Pursuant to Section 13 or 15 (d)
                     of the Securities Exchange Act of 1934

                   For the Three Months Ended March 31, 1997
                       Commission File Number 33-06419-A


                       CONDEV LAND GROWTH FUND '86, LTD.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


               FLORIDA                             59-2766359
   -------------------------------             -------------------
   (State or other jurisdiction of              (I.R.S. Employer
    incorporation of organization)             Identification No.)


                               2487 Aloma Avenue
                           Winter Park, Florida 32792
                    ----------------------------------------
                    (Address of principal executive offices)

Registrant's telephone number, including area code: (407) 679-1748


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 (or for such shorter period that the registrant
was required to file such report), and (2) has been subject to such filing
requirements for the past 90 days.  YES  X    NO      .
                                       -----     -----       
<PAGE>
 
                       CONDEV LAND GROWTH FUND '86, LTD.

                                     INDEX



PART I.  FINANCIAL INFORMATION:                             PAGE NUMBER

         ITEM 1.  Financial Statements

                  Statement of Assets,
                  Liabilities and Partner's
                  Capital - March 31, 1997
                  and December 31, 1996                        3
 
                  Statement of Income & Expense
                  Three Months Ended March 31, 1997
                  and March 31, 1997                           4

                  Statement of Cash Receipts and
                  Disbursements - Three Months
                  Ended March 31, 1997                         5

                  Notes to Financial Statements                6 - 7

         ITEM 2.  Management's Discussion and
                  Analysis of Financial Condition
                  and Results of Operations                    8

PART II.  OTHER INFORMATION:

         ITEM 6.  Exhibits and Reports on Form 8-K             8
<PAGE>
 
                         PART I.  FINANCIAL INFORMATION


Item 1.   Financial Statements:
          ---------------------

The accompanying financial statements, in the opinion of Condev Associates, the
general partner of Condev Land Growth Fund '86, Ltd., reflect all adjustments
(which include only normal recurring adjustments) necessary to a fair statement
of the financial position, the results of operations and the changes in cash
position for the periods presented.  For a full description of accounting
policies, see notes to financial statements in the 1996 annual report on 
Form 10-K.

                       CONDEV LAND GROWTH FUND '86, LTD.
             STATEMENT OF ASSETS, LIABILITIES AND PARTNER'S CAPITAL
                      MARCH 31, 1997 AND DECEMBER 31, 1996

                                    ASSETS
                                    ------
<TABLE>
<CAPTION>
                                       March 31, 1997    December 31, 1996
                                       --------------    -----------------
<S>                                    <C>               <C>
Cash & Cash Equivalents                  $   97,047           $  144,871
Accounts Receivable                              63                    0
Land, at Cost (Note 2)                    1,415,092            1,401,236
Investment in Joint
  Venture  (Note 3)                       1,522,073            1,500,919
Organization Costs, Net                      20,794               20,794
                                         ----------           ----------
             Total Assets                $3,055,069           $3,067,820
                                         ==========           ==========

                       LIABILITIES AND PARTNER'S CAPITAL
                       ---------------------------------

Partner's Capital -
 General Partner                              3,838                3,966
 Limited Partners                         3,051,231            3,063,854
                                         ----------           ----------
   Total Partner's Capital               $3,055,069           $3,067,820
                                         ----------           ----------
Total Liabilities and
        Partner's Capital                $3,055,069           $3,067,820
                                         ==========           ==========
</TABLE>

                                       3
<PAGE>
 
                       CONDEV LAND GROWTH FUND '86, LTD.
                        STATEMENT OF INCOME AND EXPENSE
              THREE MONTHS ENDED MARCH 31, 1997 AND MARCH 31, 1996
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                 March 31, 1997      March 31, 1996
                                 --------------      --------------
<S>                              <C>                 <C>
INCOME
------
Interest and Other Income          $      895          $   2,073
                                   ----------          ---------
Total Income                       $      895          $   2,073
                                   ----------          ---------

OPERATING EXPENSES
------------------
Professional Services                   9,554             10,090

Equity in loss of joint venture         1,561              1,559

Other Expense                              91                303

Office Expense                          2,440              2,426
                                   ----------         ----------
Total Operating Expense            $   13,646         $   14,378
                                   ----------         ----------
Net Income/(Loss)                  $  (12,751)        $  (12,305)
                                   ==========         ==========
</TABLE>

                                       4
<PAGE>
 
                       CONDEV LAND GROWTH FUND '86, LTD.
                            STATEMENT OF CASH FLOWS
                       THREE MONTHS ENDED MARCH 31, 1997
<TABLE>

<S>                                                           <C>
Cash flows from operating activities:
  Net Income                                                   $(    12,751)
  Adjustments to reconcile net loss
    to net cash used for operating activities:
      Equity in loss of Joint Venture, net                            1,561
      Gain on land sale                                                   0
      Cash used for changes:
        Accounts Receivable                                     (        63)
                                                                -----------
        Net cash used in operating activities                   (    11,253)
                                                                -----------
Cash flows from investing activities:
  Land development costs                                        (    13,856)
  Investment in Joint Venture                                   (    22,715)
  Proceeds from land sale                                                 0
                                                                -----------
        Net cash from investing activities                      (    36,571)
                                                                -----------
Cash flows from financing activities:
  Distributions to partners                                     (         0)
                                                                -----------
        Net cash used in financing activities                   (         0)
                                                                -----------
        Net increase in cash                                    (    47,824)
                                                                -----------
Cash and cash equivalents at beginning of year                      144,871

Cash and cash equivalents at end of period                      $    97,047
                                                                ===========
</TABLE>

                                       5
<PAGE>
 
                       CONDEV LAND GROWTH FUND '86, LTD.

                         NOTES TO FINANCIAL STATEMENTS


Note 1   BUSINESS:
         ---------

               Condev Land Growth Fund '86, Ltd. is a Florida Limited
               Partnership formed on April 17, 1986 under the Florida Uniform
               Partnership Act.  The Partnership was formed for the purpose of
               acquiring and holding for investment predevelopment land in
               Central Florida. The Partnership registered with the Securities
               and Exchange Commission a total of 7,500 units of limited
               partnership interests ("Units").  The Partnership had collected
               $7,500,000 in Partnership Capital as of December 31, 1987, the
               expiration of the offering period.

               As provided under the terms of the Partnership agreement the
               Partnership was to be in existence until December 31, 1993.  In
               accordance with the Florida Limited Partnership Law and the
               Partnership Agreement, after December 31, 1993 the Partnership
               has been in liquidation with no change in the status of the
               limited partners or general partner.

               The Partnership has fully invested all available funds in
               properties located in the Central Florida area.  Refer to Note 2
               INVESTMENT IN LAND and Note 3 INVESTMENT IN JOINT VENTURES for
               details.
 
Note 2    INVESTMENT IN LAND:
          -------------------

               At March 31, 1997, land consisted of the following:

<TABLE>
<CAPTION> 
<S>                                                                <C>
           2.83 acre parcel (zoned commercial) in
             southeast Orange County, Florida                      $  323,956
           7.00 acre parcel (zoned commercial) in
             Brevard County, Florida                                  420,503
           5.39 acre parcel (zoned commercial) in
             Orange County, Florida                                   670,633
                                                                   ----------
                                                                   $1,415,092
                                                                   ==========
</TABLE>

          For full details of investment in land, including a description
          of each parcel, please refer to the notes in Form 10-K filed as
          of December 31, 1996.


Note 3    INVESTMENT IN JOINT VENTURE:
          ----------------------------

               The Partnership owns a 59% interest in West 50 Joint Venture (A
               Florida Joint Venture) whose purpose is to acquire and hold a
               133-acre parcel of land in Lake County, Florida for investment
               purposes.  The remaining 41% interest is owned by Condev West 50,
               Ltd., an affiliate of the general partner.  The operations of
               West 50 Joint Venture consists primarily of professional services
               and real estate taxes. The Partnership's investment is carried at
               its equity in the net underlying assets.  A summary of the
               assets, liabilities, and venturers' capital of West 50 Joint
               Venture as of March 31, 1997 is as follows:

                                       6
<PAGE>
 
<TABLE> 
<CAPTION> 

                                 Assets
                                 ------
               <S>                                      <C> 
               Cash                                     $    2,465
               Investment in land                        2,577,320
                                                        ----------
                                                        $2,579,785
                                                        ==========

                      Liabilities and Venturers' Capital
                      ----------------------------------
 
               Liabilities                                       0
               Venturers' capital                        2,582,430
               Current profit (loss)                        (2,645)
                                                        $2,579,785
                                                        ==========
</TABLE>

Note 4    DISTRIBUTIONS TO PARTNERS:
          -------------------------

               Pursuant to the partnership agreement, cash flow generated each
               year by the Partnership is to be distributed 99% to the limited
               partners and 1% to the general partner.  There were no cash flow
               distributions during the first three months of 1997.

               Pursuant to the partnership agreement, proceeds realized from the
               sale of properties, after the establishment of reserves for
               future operating costs, are to be distributed at least annually.
               During the first three months of 1997 there were no distributions
               to limited partners as there were no sales of land.

Note 5    RELATED PARTY TRANSACTIONS:
          ---------------------------

               The Partnership Agreement provides for the reimbursement to  the
               general partner of administrative expenses incurred in the direct
               operation of the partnership.  For the three months ended 
               March 31, 1997, $527 was reimbursed to the general partner for
               direct expenses incurred.

               When properties are sold, under certain circumstances an
               affiliate of the general partner may be paid real estate
               commissions in amounts customarily charged by others rendering
               similar services with such commissions plus commissions paid to
               nonaffiliates not to exceed 10% of the gross sales price.  No
               real estate commissions have been paid to the general partner or
               any affiliate of the general partner during the first three
               months of 1997.

               The general partner is obligated to loan up to $100,000 to the
               Partnership during its term to meet working capital requirements.
               The General Partner has previously advanced $156,048.27 of
               working capital to the Partnership, which advance was repaid in
               December, 1993.  Since the General Partner has met its obligation
               to advance funds, it is not required to make further advances.


Note 6    OTHER INFORMATION:
          ------------------

               None

                                       7
<PAGE>
 
Item 2    Management's  discussion and analysis of financial condition and
          ----------------------------------------------------------------
          results of operations
          ---------------------

               Interest and other income for the three months ended March 31,
               1997 was $895. This compares to interest and other income of 
               $2,073 for the first three months of 1996. Operating expenses for
               the three months ended March 31, 1997 were $13,646 compared to 
               $14,378 for the three months ended March 31, 1996. The primary
               reason for this decrease was slightly lower expenses for
               professional services, which decreased from $10,090 in 1996 to 
               $9,554 in 1997. The net loss for the three months ended March 31,
               1997 was $12,751, compared to a net loss of $12,305 for the
               three months ended March 31, 1996.


               Total assets of the Partnership declined from $3,067,820 at
               December 31, 1996 to $3,055,069 at March 31, 1997, a decrease of
               $12,751.  This reflects the expenses of operating the
               Partnership during the period.  Total assets can be expected to
               decrease as land is sold and the net proceeds are distributed to
               limited partners.  Cash and cash equivalents stood at $97,047 at
               March 31, 1997, compared to $144,871 at 1996 year end.



                                    PART II


Item 6.   EXHIBITS AND REPORTS ON FORM 8-K.
          ---------------------------------

               (A)  Exhibits / Index.

                    None

               (B)  Reports on Form 8-K.

                    There were no reports on form 8-K for the three months
                    ended March 31, 1997.

                                       8
<PAGE>
 
                       CONDEV LAND GROWTH FUND '86, LTD.
                                  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.



                              CONDEV LAND GROWTH FUND '86, LTD.
                              By:   Condev Associates, General Partner



April 25, 1997                /s/ Robert N. Gardner
-----------------------       -------------------------------------------------
DATE                          Robert N. Gardner, Partner


April 25, 1997                /s/ Joseph J. Gardner
--------------------          -------------------------------------------------
DATE                          Joseph J. Gardner, Partner

                                       9