FORM 10-Q



                                        SECURITIES AND EXCHANGE COMMISSION

                                              Washington, D.C. 20549


          QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934


(Mark One)
{ X }  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
       SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended   September 30, 1996

{   }  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to


For Quarter Ended  September30, 1996        Commission file number   0-15747

                      Brown-Flournoy Equity Income Fund Limited Partnership
                      (Exact Name of Registrant as Specified in its Charter)


                 Delaware                                       58-1688140
         (State or Other Jurisdiction of                     (I.R.S. Employer
         Incorporation or Organization)                   Identification Number)



     225 East Redwood Street, Baltimore, Maryland                  21202
       (Address of Principal Executive Offices)                 (Zip Code)

        Registrant's Telephone Number, Including Area Code:     (410) 727-4083

                                               N/A
                      (Former Name, Former Address, and Former Fiscal Year,
                                 if Changed Since Last Report.)

  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 reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                    Yes     X                             No


<PAGE>

              BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP




                                                       INDEX


                                                                      Page No.
Part I.  Financial Information

           Item 1.     Financial Statements

                       Balance Sheets                                    1
                       Statements of Operations                          2
                       Statements of Partners' Capital                   3
                       Statements of Cash Flows                          4
                       Notes to Financial Statements                    5-6


           Item 2.     Management's Discussion and Analysis of
                       Financial Condition and Results of Operations    7-8


Part II.   Other Information

           Item 1. through Item 6.                                       9

           Signatures                                                   10





<PAGE>
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP

Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>


                                                        September 30,      December 31,
                                                            1996               1995

Assets

<S>                                                    <C>                <C>
 Investment in real estate                             $  14,515,244      $ 15,200,825
 Cash and cash equivalents                                 1,830,412         1,447,679
 Other assets
  Accounts receivable, including $5,992 due
   affiliates as of September 30, 1996                        23,263            22,624
  Prepaid expenses                                            12,203            65,417
  Loan fees, less accumulated amortization
   of $540,886 and $469,856, respectively                     90,108            49,459

 Total other assets                                          125,574           137,500

Total assets                                           $  16,471,230      $ 16,786,004


Liabilities and Partners' Capital

 Accounts payable and accrued expenses including
  $29,952 and $27,523 due to affiliates, respectively  $     636,164      $    453,493
 Tenant security deposits                                    124,072           130,542
 Mortgage loans payable                                   20,400,000        20,200,950

 Total liabilities                                        21,160,236        20,784,985


 Partners' Capital
  General Partners                                          (248,323)         (234,522)
  Limited Partners
   Class A - $1,000 stated value per unit;
    27,000 units outstanding                              (4,440,783)       (3,764,559)
   Class B                                                       100               100

 Total partners' capital                                  (4,689,006)       (3,998,981)

Total liabilities and partners' capital                $  16,471,230      $ 16,786,004


</TABLE>

See accompanying notes to financial statements

-1-
<PAGE>
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP

Statements of Operations
(Unaudited)

<TABLE>
<CAPTION>

                                              Three Months Ended             Nine Months Ended
                                              September 30,  September 30,   September 30,  September 30,
                                                  1996           1995            1996           1995

Revenues
<S>                                          <C>           <C>              <C>           <C>
 Rental income                               $   1,242,376 $    1,180,371   $   3,585,281 $    3,447,855
 Interest income                                    16,019         18,101          44,308         51,631

                                                 1,258,395      1,198,472       3,629,589      3,499,486


Expenses
 Compensation and related benefits                 128,949        115,906         380,193        332,764
 Utilities                                          75,295         69,969         213,089        191,671
 Property taxes                                     90,084         87,007         273,580        266,833
 Insurance                                          17,897         18,329          53,745         54,623
 Advertising                                        19,885         25,934          81,154         59,979
 Maintenance and repairs                           120,271        210,704         336,579        417,810
 Property management fee                            62,119         59,019         179,264        172,393
 Other                                               9,099          9,113          25,788         25,661
 Administrative and professional fees               18,531         22,490          57,828         64,957
 Interest expense                                  483,783        484,182       1,451,548      1,459,844
 Depreciation of property and equipment            260,514        254,405         782,551        765,737
 Amortization of loan fees                          33,936         18,547          71,030         55,641

                                                 1,320,363      1,375,605       3,906,349      3,867,913

Net loss                                     $     (61,968) $    (177,133)  $    (276,760) $    (368,427)


Net loss per unit of Class A limited
 partnership interest                        $       (2.25) $       (6.43)  $      (10.05) $      (13.37)

</TABLE>


See accompanying notes to financial statements

-2-
<PAGE>
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP

Statements of Partners' Capital
For the nine months ended September 30,
         (Unaudited)

<TABLE>
<CAPTION>
                                           Class A     Class B
                               General     Limited     Limited
                               Partners    Partner     Partners     Total


<S>                          <C>        <C>          <C>        <C>
Balance at December 31, 1995 $ (234,522)$ (3,764,559)$      100 $ (3,998,981)

Net loss                         (5,535)    (271,225)          -    (276,760)

Distributions to partners        (8,265)    (405,000)          -    (413,265)


Balance at September 30, 1996$ (248,322)$ (4,440,784)$      100 $ (4,689,006)



Balance at December 31, 1994 $ (215,657)$ (2,840,151)$      100 $ (3,055,708)

Net loss                         (7,369)    (361,058)          -    (368,427)

Distributions to partners       (13,776)    (675,000)          -    (688,776)


Balance at September 30, 1995$ (236,802)$ (3,876,209)$      100 $ (4,112,911)


</TABLE>


See accompanying notes to financial statements

             -3-
<PAGE>
BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP

Statements  of Cash Flows For the nine months ended  September  30,  (Unaudited)
<TABLE>
<CAPTION>

                                                                        1996                1995


Cash flow from operating activities
<S>                                                                <C>                <C>
 Net loss                                                          $    (276,760)     $      (368,427)
 Adjustments to reconcile net loss to net
  cash provided by operating activities
   Depreciation of property and equipment                                782,551              765,737
   Amortization of loan fees                                              71,030               55,641
   Changes in assets and liabilities
    (Increase) decrease in accounts receivable                              (639)            (127,999)
    Decrease in prepaid expenses                                          53,214               54,131
    Increase  in accounts payable and accrued expenses                   182,671              170,750
    (Decrease) increase in tenant security deposits                       (6,470)              14,636

Net cash provided by operating activities                                805,597              564,469

Cash flows from investing activities-
 additions to investment in real estate                                  (96,970)             (63,678)

Cash flows from financing activities
 Decrease in mortgage loans payable                                      (90,080)             (93,313)
 Proceeds from mortgage refinancing                                   20,400,000                     -
 Repayment of mortgage loans                                         (20,110,870)                    -
 Financing costs                                                        (111,679)                    -
 Distributions to investors                                             (413,265)            (688,775)

Net cash used in financing activities                                   (325,894)            (782,088)


Net increase (decrease) in cash and cash equivalents                     382,733             (281,297)

Cash and cash equivalents
 Beginning of period                                                   1,447,679            1,738,073

 End of period                                                     $   1,830,412      $     1,456,776


</TABLE>


See accompanying notes to financial statements

-4-
<PAGE>
                          BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP

                                           Notes to Financial Statements
                                                September 30, 1996
                                                    (Unaudited)


(1)     The Fund and Basis of Preparation

        The accompanying  financial  statements of Brown-Flournoy  Equity Income
        Fund  Limited  Partnership  (the  "Fund")  do  not  include  all  of the
        information  and  note  disclosures   normally   included  in  financial
        statements  prepared in accordance  with generally  accepted  accounting
        principles.  The  unaudited  interim  financial  statements  reflect all
        adjustments which are, in the opinion of management, necessary to a fair
        statement  of the results for the interim  periods  presented.  All such
        adjustments  are of a normal  recurring  nature.  The unaudited  interim
        financial  information  should be read in conjunction with the financial
        statements contained in the 1995 Annual Report.


(2)     Investment in Real Estate

        Investment in real estate is stated at the lower of net realizable value
        or cost, net of accumulated depreciation, and is summarized as follows:
<TABLE>
<CAPTION>
                                                               September 30, 1996December 31, 1995

<S>                                                                     <C>                       <C>
              Land                                                      $ 1,205,950               $  1,205,950
              Buildings                                                 20,417,743                20,417,743
              Furniture, fixtures and equipment                         2,299,242                 2,202,272
                                                                        --------------            --------------
                                                                        23,922,935                23,825,965
              Less:  accumulated depreciation                           9,407,691                 8,625,140
                                                                        --------------            --------------
              Total                                                     $14,515,244               $15,200,825
                                                                        ========                  ========

</TABLE>


(3)     Cash and Cash Equivalents

        The  Fund  considers  all  highly  liquid   investments   with  original
        maturities of three months or less to be cash equivalents. Cash and cash
        equivalents consist of the following, stated at cost, which approximates
        market value.
<TABLE>
<CAPTION>
                                                               September 30, 1996December 31, 1995

<S>                                                                     <C>                       <C>
        Cash and money market                                           $ 907,486                 $ 428,716
        Certificates of deposit with interest rates
              ranging from 5.0% to 5.6% in 1996
              and 4.25%  to 5.9% in 1995                                922,926                   1,018,963
                                                                 --------------            --------------
                                                                        $1,830,412           $1,447,679
                                                                        ========                  ========

</TABLE>

(4)     Related Party Transactions

        Brown  Equity  Income  Properties,   Inc.,  the  Administrative  General
        Partner,  billed  the Fund  $9,964  and  $6,490  in the  quarters  ended
        September 30, 1996 and 1995, respectively, for reimbursement of the cost
        of  administrative  services  and  expenses  made on behalf of the Fund.
        Flournoy  Properties,  Inc.,  an  affiliate of the  Development  General
        Partner,  is  the  managing  agent  for  the  properties  and  earned  a
        management fee of $62,119 and $59,019  representing  5% of gross monthly
        operating  revenues  from  the  properties  during  the  quarters  ended
        September 30, 1996 and 1995, respectively.

                                                      -5-


<PAGE>

                          BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP

                                           Notes to Financial Statements
                                                September 30, 1996
                                                    (Unaudited)


(5)     Mortgage Loans Payable

        The first  mortgage loans are secured by the land,  apartment  units and
        all other improvements on the four apartment properties. These loans are
        for an original  term of 7 years with  interest  only  payments at 9.6%.
        Since  October,  1994,  monthly  payments  have been  based on a 30-year
        amortization  schedule  with a balloon  payment  due at the end of the 7
        year term. Interest expense of $461,390 and $484,685 was paid during the
        quarters ended September 30, 1996 and 1995, respectively.

        The mortgage  loans  matured on September 1, 1996.  The Fund  refinanced
        these  loans with  Columbus  Bank & Trust.  The terms of the  commitment
        provide  for  interest  only  payments  of  prime  plus  1%  in  monthly
        installments.  The new loans total  $20,400,000  and  provided  proceeds
        sufficient to satisfy the repayment of the old mortgage  loans,  as well
        as all costs of the refinancing.  The commitment  provides for repayment
        of the new loans at the end of 12 months.  The Fund is required to pay a
        commitment   fee  of  one  point   payable  in   advance  in   quarterly
        installments.


(6)     Net Loss per Unit of Class A Limited Partnership Interest

        Net loss per Class A Limited  Partnership  interest is  disclosed on the
        Statements of Operations and is based upon 27,000 units outstanding.



                                                      -6-

<PAGE>
                         BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP

                             Management's Discussion and Analysis of Financial
                                        Condition and Results of Operations

Liquidity and Capital Resources

         At  September  30,  1996,  the Fund had a working  capital  position of
unrestricted  cash and cash  equivalents of $1,706,340 and accounts  payable and
accrued expenses of $636,164.  Restricted cash represents  amounts retained from
tenants for security  deposits and totaled  $124,072 at September 30, 1996.  The
working capital balance represents  reserves for future  contingencies that were
established  from mortgage  loan proceeds and are deemed  sufficient to meet the
Fund's liquidity  requirements even under very pessimistic  operating scenarios.
Reserves may be distributed as the General Partners deem appropriate.

         Cash and cash equivalents  increased  $325,910 during the third quarter
of 1996. This increase represents the net effect of $334,257 in cash provided by
operating  activities,  $25,592 utilized for capital  expenditures,  pay down of
first mortgage balances of $22,451, proceeds of $177,451 from the refinancing of
the existing debt and distributions to investors of $137,755.

         In November 1996 the Fund made a cash  distribution to its investors of
$137,755.  This distribution was derived from unrestricted cash available at the
end of the third quarter.

         On August 27, 1996, the Fund closed on interim one year,  interest only
loans payable in September 1997. This loan will serve the financial needs of the
Fund until it selects a permanent  financial  solution for the  repayment of its
debt. The terms of the interim  financing  provide for interest only payments of
prime (8.25% at September  30,  1996) plus 1% in monthly  installments.  The new
loans  total  $20,400,000  and  provided  proceeds  sufficient  to  satisfy  the
repayment  of  the  existing  mortgage  loans,  as  well  as  all  costs  of the
refinancing.


Results of Operations

         Rental  revenues  for both the third  quarter  and first nine months of
1996 were 5% and 4% higher,  respectively,  than the same periods in 1995. These
increases were the result of rental rate increases implemented at the properties
over the last  twelve  months.  Additional  revenue  increases  were  related to
management's  increased  focus on  corporate  rental  units.  For the first nine
months of 1996,  revenue  from  corporate  rental  units  totaled  approximately
$28,000.

         Total  expenses  during  the  third  quarter  of 1996  were  down 4% as
compared  to the same  period  in  1995.  This  decrease  was  largely  due to a
reduction  in  maintenance  and  repairs  needed  at the  properties.  The  1995
maintenance and repairs  expenditures  reflected exterior painting on two of the
Fund's  four  properties.  For the  first  nine  months  of 1996  expenses  were
marginally higher than during the same period in 1995.

         Overall  occupancy  for the Fund's  properties  averaged 93% during the
third quarter of 1996.  For the first nine months of 1996,  the Fund had a total
occupancy  level of 91%.  These  percentages  represent  decreases of 1% and 2%,
respectively,  from the same  periods  in 1995 and are  primarily  the result of
lower occupancies at the Southland Station and Park Place properties.  Occupancy
at Park Place  averaged  89% during the first nine months of 1996, a 7% decrease
over the same period in 1995. Southland Station's occupancy averaged 87% for the
first nine months of 1996, a 1% decrease over the same period in 1995.

         The Hidden  Lake  property,  located  in Union  City,  Georgia,  had an
average  occupancy rate of 96% during the third quarter of 1996.  This occupancy
was equal to the rate recorded  during the same period of 1995.  This stabilized
occupancy  rate has allowed  management  to increase  rental  rates for all unit
types.

         During the third quarter of 1996, the High Ridge  property,  located in
Athens,  Georgia,  achieved an average  occupancy of 92%, a 4% decrease from the
same period in 1995.  The  propensity of renters to purchase or build houses has
been a major  factor  in this  decreased  occupancy.  Over the past few  months,
rental  rates have  increased  and led to a 6% increase in revenue for the first
nine  months  of 1996,  as  compared  to the same  period  in 1995.  A  recently
implemented  corporate  rental  program has met great  success and has increased
revenue by approximately $15,000 during the first nine months of 1996.

                                                      -7-

<PAGE>


                         BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP

                             Management's Discussion and Analysis of Financial
                                      Condition and Results of Operations
Results of Operations (continued)

         Occupancy at Park Place  averaged  93% for third  quarter of 1996, a 3%
drop from the 96% occupancy  attained  during the third  quarter of 1995.  Total
revenues  increased 7% during the first nine months of 1996,  as compared to the
same period in 1995.  This increase is attributed to rental rate  increases that
have been implemented during the first nine months of the year.

         During the third  quarter  of 1996,  Southland  Station  had an average
occupancy rate of 91%, a 3% increase over the same period in 1995. For the first
nine months of 1996,  occupancy  averaged  87%, a slight  decrease from the same
period of 1995. Total revenues during the first nine months of 1996 decreased 3%
when  compared to the same period in 1995.  The decision by would-be  renters to
purchase  or  build  a  house  has  challenged  the  property's  operations.   A
comprehensive  marketing  program that includes an emphasis on corporate  rental
units  was  recently  implemented,   and  should  return  the  property  to  its
historically strong, stabilized occupancy levels.


Flournoy Development Company

         Flournoy  Development  Company,  an affiliate of the Fund's Development
General  Partner,  John F.  Flournoy,  has been  evaluating  the  feasibility of
reorganizing its operations into a Real Estate Investment Trust. It appears that
the REIT could be formed as early as the first  quarter  of 1997,  at which time
Flournoy  Development Company would hope to acquire the four properties owned by
the Fund. If this process continues to advance,  Flournoy Development  Company's
proposal,  along with a consent form,  will be distributed to each of the Fund's
investors.


                                                      -8-

<PAGE>


                         BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP


                                            PART II. OTHER INFORMATION




Item 1.     Legal Proceedings

                  Inapplicable

Item 2.     Changes in Securities

                  Inapplicable

Item 3.     Defaults upon Senior Securities

                  Inapplicable

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

                  Inapplicable

Item 5.     Other Information

                  Inapplicable

Item 6.     Exhibits and Reports on Form 8-K

                  a)  Exhibits:   None.

                  b)  Reports on Form 8-K:  None.



                                                        -9-

<PAGE>



<PAGE>
              BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP




                                                    SIGNATURES





Pursuant to the requirements of Section 13 or 15 (d) of the Securities  Exchange
Act of 1934, as amended, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.



                                         BROWN-FLOURNOY EQUITY INCOME FUND
                                                          LIMITED PARTNERSHIP



DATE:        11/11/96                    By:    /s/ John M. Prugh
                                                  John M. Prugh
                                            President and Director
                      Brown Equity Income Properties, Inc.
                                            Administrative General Partner



DATE:        11/11/96                    By:     /s/ Timothy M. Gisriel
                                            Timothy M. Gisriel
                                            Treasurer
                      Brown Equity Income Properties, Inc.
                                            Administrative General Partner



                                                       -10-

<PAGE>