<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 Nine Months Ended September 30, 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 
                                       ------     ------
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                       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 - September 30, 1997
                        and December 31, 1996                      3
 
                        Statement of Income & Expense
                        Three Months Ended September 30, 1997
                        and September 30, 1996                     4

                        Statement of Income & Expense
                        Nine Months Ended September 30, 1997
                        and September 30, 1996                     5

                        Statement of Cash Receipts and
                        Disbursements - Nine Months
                        Ended September 30, 1997                   6

                        Notes to Financial Statements              7 - 9

               ITEM 2.  Management's Discussion and

                        Analysis of Financial Condition
                        and Results of Operations                  10

PART II.       OTHER INFORMATION:

               ITEM 6.  Exhibits and Reports on Form 8-K           10

                                       2
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                        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
                   SEPTEMBER 30, 1997 AND DECEMBER 31, 1996

                                    ASSETS
                                    ------

                             September 30, 1997       December 31, 1996
                             ------------------       -----------------

Cash & Cash Equivalents          $   61,495             $  144,871
Accounts Receivable                   1,682                      0
Land, at Cost (Note 2)            1,434,308              1,401,236
Investment in Joint
  Venture  (Note 3)               1,528,906              1,500,919
Organization Costs, Net              20,794                 20,794
                                 ----------             ----------
 
             Total Assets        $3,047,185             $3,067,820
                                 ==========             ==========


                       LIABILITIES AND PARTNER'S CAPITAL
                       ---------------------------------
 
Partner's Capital -
  General Partner                     3,760                  3,966
  Limited Partners                3,043,425              3,063,854
                                 ----------             ----------

    Total Partner's Capital      $3,047,185             $3,067,820
                                 ----------             ----------
 
Total Liabilities and
          Partner's Capital      $3,047,185             $3,067,820
                                 ==========             ==========

                                       3
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                       CONDEV LAND GROWTH FUND '86, LTD.
                        STATEMENT OF INCOME AND EXPENSE
         THREE MONTHS ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
                                  (UNAUDITED)


                              September 30, 1997   September 30, 1996
                              ------------------   ------------------
 
INCOME
------

Interest and Other Income            $     919          $  2,943
 
Gain on sale of land                         0            45,017
 
Equity in income of Joint Venture            0           148,209
                                     ---------          --------
 
Total Income                         $     919          $196,169
                                     ---------          --------
 
OPERATING EXPENSES
------------------
 
Professional Services                        0                26
 
Equity in loss of joint venture            275            (1,441)
 
Management Fees                          2,124                 0
 
Other Expense                               20              (533)
 
Office Expense                           1,056             2,097
                                     ---------          --------
 
Total Operating Expense              $   3,475          $    149
                                     ---------          --------
 
Net Income/(Loss)                    $  (2,556)         $196,020
                                     =========          ========

                                       4
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                       CONDEV LAND GROWTH FUND '86, LTD.
                        STATEMENT OF INCOME AND EXPENSE
          NINE MONTHS ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
                                  (UNAUDITED)


                                 September 30, 1997       September 30, 1996
                                 ------------------       ------------------
 
INCOME
------
 
Interest and Other Income            $    3,227                 $  7,281
 
Equity in income of Joint Venture             0                  148,209
 
Gain on Sale of Land                          0                  194,365
                                     ----------                 --------
 
Total Income                         $    3,227                 $349,855
                                     ----------                 --------
 
 
OPERATING EXPENSES
------------------
 
Professional Services                     9,699                   11,492
 
Equity in loss of joint venture           1,456                      118
 
Management Fees                           6,972                        0
 
Other Expense                             1,191                    1,452
 
Office Expense                            4,544                    8,366
                                     ----------                 --------
 
Total Operating Expense              $   23,862                 $ 21,428
                                     ----------                 --------
 
Net Income/(Loss)                    $  (20,635)                $328,427
                                     ==========                 ========

                                       5
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                       CONDEV LAND GROWTH FUND '86, LTD.
                            STATEMENT OF CASH FLOWS
                     NINE MONTHS ENDED SEPTEMBER 30, 1997
 
 
Cash flows from operating activities:
  Net Income (Loss)                                        $  (20,635)
    Adjustments to reconcile net loss
    to net cash used for operating activities:
        Equity in loss of Joint Venture, net                    1,456
        Gain on land sale                                           0
        Cash used for changes:
          Accounts Receivable                                  (1,682)
  Net cash used in operating activities:                      (20,861)
 
Cash flows from investing activities:
  Land development costs                                      (33,072)
  Investment in Joint Venture                                 (29,443)
  Proceeds from land sale                                           0
                                                           ----------
Net cash from investing activities:                           (62,515)
 
Cash flows from financing activities:
  Distributions to partners                                        (0)
Net cash used in financing activities:                             (0)
 
Net increase (decrease) in cash                               (83,376)
 
Cash and cash equivalents at beginning of year                144,871
                                                           ----------
 
Cash and cash equivalents at end of period                 $   61,495
                                                           ==========

                                       6
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                       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 September 30, 1997, land consisted of the following:
                    2.83 acre parcel (zoned commercial) in
                         southeast Orange County, Florida          $  330,577(a)
                    7.00 acre parcel (zoned commercial) in
                         Brevard County, Florida                      420,503(b)
                    5.39 acre parcel (zoned commercial) in
                         Orange County, Florida                       682,228(c)
                                                                  -----------   
                                                                  $ 1,434,308
                                                                  ===========
 
               (a) On June 27, 1997, the Partnership executed an Option contract
               providing for Amoco Oil Company to acquire this parcel.  The
               Option provides for an inspection period of 90 days followed by a
               period in which Amoco is required to file for all necessary
               building permits preparatory to closing. The Inspection Period
               has been extended for an additional 60 days to allow time for the
               Partnership to conclude settlement with Orange County Department
               of Transportation relating to proposed intersection improvements.
 
               (b) On April 28, 1997 the Partnership entered into an Agreement
               with a nationally recognized developer of retail sites for the
               sale of this entire parcel. This contract was canceled by the
               Buyer on July 16 when the anticipated user 

                                       7
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               for the site deferred its development plans until 1998.
               Consequently, this property is now back on the market. The
               Partnership has received an offer from a nationally recognized
               fast food restaurant company for a portion of this property. The
               Partnership is negotiating the terms of this offer, and hopes to
               conclude a final contract in the fourth quarter of 1997.

               (c) During the third quarter of 1997, the Partnership entered
               into two contracts for the remaining 5.39 acres at this location.
               Both buyers intend to develop their portion of the site, and are
               currently in a 60-day inspection period. Closing on both
               transactions is expected within 180 days of the Contract
               Effective Date.

               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 consist 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 September 30, 1997 is as follows:
 
 
                                    Assets
                                    ------

               Cash                                     $    2,499
               Investment in land                        2,588,867
                                                        ----------
                                                        $2,591,366
                                                        ========== 

                      Liabilities and Venturers' Capital
                      ----------------------------------
 
               Liabilities                                       0
               Venturers' capital                        2,593,834
               Current profit (loss)                        (2,468)
                                                        $2,591,366
                                                        ==========

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 nine months of 1997.

                                       8
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               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 nine 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 nine months ended
               September 30, 1997, $8,315 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 nine 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

                                       9
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Item 2         Management's  discussion and analysis of financial condition and
               ----------------------------------------------------------------
               results of operations
               ---------------------

               Interest and other income for the nine months ended September 30,
               1997 was $ 3,227. This compares to interest and other income of $
               7,281 for the first nine months of 1996. The decrease reflects a
               lower level of cash invested by the Partnership during 1997.
               Total income for the nine months ending September 30, 1997 was
               $3,227 compared with $349,855 for the comparable period in 1996.
               The 1996 figure includes a net gain on the sale of land in the
               amount of $194,365 and equity in the net income of the
               Partnership's joint venture, Condev/McCulloch Road Joint Venture,
               in the amount of $148,209.  There were no sales of land during
               the first nine months of 1997. Operating expenses for the nine
               months ended September 30, 1997 were $ 23,862 compared to $
               21,428 for the nine months ended September 30, 1996.  The primary
               reason for this increase was $6,972 in management fees which were
               charged quarterly during 1997 but in the fourth quarter for the
               entire year in 1996.  This was partially offset by slightly lower
               expenses for professional services and lower office expenses
               during the 1997 period.  The net loss for the nine months ended
               September 30, 1997 was $ 20,635, compared to a net profit of $
               328,428 for the nine months ended September 30, 1996.


               Total assets of the Partnership declined from $3,067,820 at
               December 31, 1996 to $3,047,185 at September 30, 1997.  This
               reflects the operating income less 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 $ 61,495 at
               September 30, 1997, compared to $144,871 at 1996 year end. Cash
               will be increased by retaining an appropriate amount from
               anticipated future sales.



                                 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 nine months
                    ended September 30, 1997.

                                       10
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                       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



October 27  1997               /s/ Robert N. Gardner
-------------------------      ------------------------------------------------ 
DATE                           Robert N. Gardner, Partner


October 27, 1997               /s/ Joseph J. Gardner
-------------------------      ------------------------------------------------ 
DATE                           Joseph J. Gardner, Partner

                                       11