UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-QSB

(Mark One)
[X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934

                 For the quarterly period ended June 30, 2002


[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934


           For the transition period from __________ to __________

                         Commission file number 0-10884


                              SHELTER PROPERTIES IV
      (Exact name of small business issuer as specified in its charter)



         South Carolina                                          57-0721760
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

                       55 Beattie Place, P.O. Box 1089
                       Greenville, South Carolina 29602
                   (Address of principal executive offices)

                                 (864) 239-1000
                           (Issuer's telephone number)
<PAGE>



                         PART I - FINANCIAL INFORMATION



ITEM 1.     FINANCIAL STATEMENTS




                              SHELTER PROPERTIES IV
                           CONSOLIDATED BALANCE SHEET
                                   (Unaudited)
                       (in thousands, except unit data)

                                  June 30, 2002
<TABLE>
<CAPTION>

Assets
<S>                                                                          <C>
   Cash and cash equivalents                                                 $   779
   Receivables and deposits                                                      407
   Restricted escrows                                                            905
   Other assets                                                                  583
   Investment properties:
      Land                                                    $ 2,759
      Buildings and related personal property                   52,846
                                                                55,605
      Less accumulated depreciation                            (32,618)       22,987
                                                                            $ 25,661

Liabilities and Partners' Capital
Liabilities
   Accounts payable                                                          $ 131
   Tenant security deposit liabilities                                           230
   Accrued property taxes                                                        327
   Other liabilities                                                             569
   Mortgage notes payable                                                     20,644

Partners' Capital
   General partners                                             $ 117
   Limited partners (49,995 units issued and
      outstanding)                                               3,643         3,760
                                                                            $ 25,661

         See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>


                              SHELTER PROPERTIES IV
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                     (in thousands, except per unit data)
<TABLE>
<CAPTION>

                                          Three Months Ended          Six Months Ended
                                               June 30,                   June 30,
                                          2002          2001         2002          2001
Revenues:
<S>                                      <C>          <C>           <C>           <C>
  Rental income                          $ 2,344      $ 2,328       $ 4,609       $ 4,633
  Other income                               207          204           477           366
  Casualty gains (Note E)                    140           20           140            20
      Total revenues                       2,691        2,552         5,226         5,019

Expenses:
  Operating                                  952        1,196         2,019         2,315
  General and administrative                 101           77           204           195
  Depreciation                               550          520         1,094         1,038
  Interest                                   403          415           799           793
  Property taxes                             165          171           332           343
  Loss on early extinguishment of
    debt                                      27           --            27            --
      Total expenses                       2,198        2,379         4,475         4,684

Net income                                $ 493        $ 173         $ 751         $ 335

Net income allocated to general
  partners (1%)                            $ 5          $ 1           $ 8           $ 3
Net income allocated to limited
  partners (99%)                             488          172           743           332

                                          $ 493        $ 173         $ 751         $ 335

Net income per limited partnership
  unit                                   $ 9.76        $ 3.44       $ 14.86       $ 6.64

Distributions per limited
  partnership unit                       $ 73.79       $ 7.02       $ 73.79       $ 13.32

         See Accompanying Notes to Consolidated Financial Statements
</TABLE>

<PAGE>


                            SHELTER PROPERTIES IV
            CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL
                                   (Unaudited)
                       (in thousands, except unit data)


<TABLE>
<CAPTION>

                                       Limited
                                     Partnership     General      Limited
                                        Units        Partners    Partners     Total

<S>                                    <C>             <C>        <C>        <C>
Original capital contributions         50,000          $ 2        $50,000    $50,002

Partners' capital at
   December 31, 2001                   49,995         $ 109       $ 6,589    $ 6,698

Distributions to partners                  --             --       (3,689)    (3,689)

Net income for the six months
   ended June 30, 2002                     --              8          743        751

Partners' capital at
   June 30, 2002                       49,995         $ 117       $ 3,643    $ 3,760

         See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>


                              SHELTER PROPERTIES IV
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                (in thousands)
<TABLE>
<CAPTION>

                                                                  Six Months Ended
                                                                        June 30,
                                                                  2002        2001
Cash flows from operating activities:
<S>                                                              <C>          <C>
  Net income                                                     $ 751        $ 335
  Adjustments to reconcile net income to net cash provided
   by operating activities:
     Loss on early extinguishment of debt                            27           --
     Depreciation                                                 1,094        1,038
     Amortization of discounts and loan costs                       125          123
     Casualty gain                                                 (140)         (20)
     Change in accounts:
      Receivables and deposits                                     (228)           1
      Other assets                                                 (241)        (189)
      Accounts payable                                             (147)          43
      Tenant security deposit liabilities                             5            8
      Accrued property taxes                                        133          150
      Other liabilities                                             200         (289)
         Net cash provided by operating activities                1,579        1,200

Cash flows from investing activities:
  Property improvements and replacements                         (1,048)      (1,266)
  Net insurance proceeds received                                   208           28
  Net withdrawals from (deposits to) restricted escrows             342         (433)
         Net cash used in investing activities                     (498)      (1,671)

Cash flows from financing activities:
  Proceeds from mortgage note payable                             8,450           --
  Repayment of mortgage notes payable                            (4,963)          --
  Loan costs paid                                                  (214)          --
  Advances from affiliate                                            95           --
  Repayment of advances from affiliate                              (95)          --
  Distributions to partners                                      (3,689)        (666)
  Payments on mortgage notes payable                               (403)        (413)
         Net cash used in financing activities                     (819)      (1,079)

Net increase (decrease) in cash and cash equivalents                262       (1,550)
Cash and cash equivalents at beginning of period                    517        2,042
Cash and cash equivalents at end of period                       $ 779        $ 492

Supplemental disclosure of cash flow information:
  Cash paid for interest                                         $ 691        $ 673

Included in  property  improvements  for the six months  ended June 30, 2001 are
approximately  $927,000 of improvements  which were included in accounts payable
at December 31, 2000.

         See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>

                              SHELTER PROPERTIES IV
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note A - Basis of Presentation

The  accompanying   unaudited   consolidated  financial  statements  of  Shelter
Properties  IV  (the  "Partnership"  or  "Registrant")  have  been  prepared  in
accordance with generally accepted  accounting  principles for interim financial
information  and  with  the  instructions  to Form  10-QSB  and  Item 310 (b) of
Regulation  S-B.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial  statements.  In the  opinion of Shelter  Realty IV  Corporation  (the
"Corporate  General Partner"),  all adjustments  (consisting of normal recurring
accruals)  considered  necessary  for a fair  presentation  have been  included.
Operating  results for the three and six month  periods  ended June 30, 2002 are
not  necessarily  indicative  of the results  that may be expected  for the year
ending  December 31, 2002. For further  information,  refer to the  consolidated
financial  statements and footnotes thereto included in the Partnership's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2001. The Corporate
General Partner is a subsidiary of Apartment  Investment and Management  Company
("AIMCO"), a publicly traded real estate investment trust.

Effective  April  1,  2002,  the  Partnership  adopted  Statement  of  Financial
Accounting  Standards ("SFAS") No. 145, "Rescission of FASB Statements No. 4, 44
and 64". SFAS No. 4 "Reporting  Gains and Losses from  Extinguishment  of Debt,"
required  that all gains and losses from  extinguishment  of debt be  aggregated
and, if material,  classified as an  extraordinary  item.  SFAS No. 145 rescinds
SFAS No. 4, and accordingly, gains and losses from extinguishment of debt should
only be  classified  as  extraordinary  if they are  unusual in nature and occur
infrequently. Neither of these criteria applies to the Partnership. As a result,
the accompanying consolidated statements of operations reflect the loss on early
extinguishment  of debt at Quail Run  Apartments  (see  "Note D") in  operations
rather than as an extraordinary item.

Note B - Reconciliation of Cash Flows

As required by the Partnership  Agreement,  the following is a reconciliation of
"net cash provided by operating  activities"  in the  accompanying  consolidated
statements  of cash  flows to "net  cash from  operations",  as  defined  in the
Partnership  Agreement.  However,  "net  cash  from  operations"  should  not be
considered  an  alternative  to net income as an indicator of the  Partnership's
operating performance or to cash flows as a measure of liquidity.

                                                        For the Six Months Ended
                                                                June 30,
                                                          2002             2001
                                                             (in thousands)
     Net cash provided by operating activities           $ 1,579        $ 1,200
       Payments on mortgage notes payable                   (403)          (413)
       Property improvements and replacements             (1,048)        (1,266)
       Change in restricted escrows, net                     342           (433)
       Changes in reserves for net operating
         liabilities                                         278            276
       (Additional) release of reserves                     (748)           636

          Net cash from operations                        $ --            $ --



The Corporate General Partner reserved net cash from operations of approximately
$748,000 at June 30, 2002 to fund continuing capital improvements and repairs at
the Partnership's two investment properties.

The Corporate General Partner released previously reserved cash of approximately
$636,000 during the six months ended June 30, 2001.

Note C - Transactions with Affiliated Parties

The  Partnership  has no employees  and is dependent  on the  Corporate  General
Partner  and  its  affiliates  for  the  management  and  administration  of all
Partnership  activities.  The  Partnership  Agreement  provides  for (i) certain
payments to affiliates for services and (ii)  reimbursement  of certain expenses
incurred by affiliates on behalf of the Partnership.

Affiliates of the Corporate  General Partner are entitled to receive 5% of gross
receipts from all of the  Registrant's  properties as compensation for providing
property   management   services.   The  Registrant   paid  to  such  affiliates
approximately  $261,000  and $253,000 for the six months ended June 30, 2002 and
2001, respectively, which are included in operating expenses.

Affiliates  of  the  Corporate   General  Partner   received   reimbursement  of
accountable  administrative  expenses  amounting to  approximately  $288,000 and
$168,000  for the six months ended June 30, 2002 and 2001,  respectively,  which
are included in general and administrative  expenses and investment  properties.
Included in these amounts are fees related to construction  management  services
provided by an  affiliate  of the  Corporate  General  Partner of  approximately
$120,000  for the six months  ended June 30,  2002.  No such fees were  incurred
during the six months ended June 30, 2001. The construction  management  service
fees are  calculated  based upon a percentage  of current year  additions to the
investment properties.

In addition to reimbursement for services of affiliates, the Partnership paid an
affiliate of the Corporate General Partner  approximately $85,000 during the six
months  ended June 30, 2002 for loan costs which are  capitalized  and  included
with  other  assets  on the  consolidated  balance  sheets.  This  loan cost was
associated with the refinancing of Quail Run Apartments (see "Note D").

In accordance  with the  Partnership  Agreement,  the Corporate  General Partner
loaned the  Partnership  funds to assist in paying  property  taxes at Quail Run
Apartments.  During the six months ended June 30, 2002, the Partnership received
advances of approximately  $95,000 and made principal  payments of approximately
$95,000.  Interest  is charged at the prime rate plus 2%.  Interest  expense was
approximately $200 for the six months ended June 30, 2002.

Pursuant  to the  Partnership  Agreement  and in  connection  with  the  sale of
Countrywood Village in August of 2000, the Corporate General Partner is entitled
to a  commission  of up to 1% for its  assistance  in the sale.  Payment of such
commission  is  subordinate  to the limited  partners  receiving a cumulative 7%
return on their  investment.  This return has not yet been met, and accordingly,
the  $178,000  was  accrued  and  is  included  in  other   liabilities  in  the
accompanying consolidated balance sheet at June 30, 2002.

Beginning in 2001, the  Partnership  began insuring its properties up to certain
limits through coverage provided by AIMCO which is generally  self-insured for a
portion of losses and  liabilities  related  to workers  compensation,  property
casualty and vehicle liability. The Partnership insures its properties above the
AIMCO  limits  through  insurance  policies  obtained  by  AIMCO  from  insurers
unaffiliated  with the Corporate  General  Partner.  During the six months ended
June 30, 2002 and 2001, the  Partnership was charged by AIMCO and its affiliates
approximately  $164,000 and $172,000,  respectively,  for insurance coverage and
fees associated with policy claims administration.

Note D - Refinancing and Extraordinary Loss

On June 14, 2002,  the  Partnership  refinanced  the mortgage notes at Quail Run
Apartments.  Gross  proceeds  from  the  refinancing  were  $8,450,000  of which
approximately  $4,963,000 was used to repay the existing mortgage notes. The new
note requires monthly  principal and interest  payments at a fixed rate of 7.16%
and matures July 1, 2022 at which time the loan will be fully amortized. The old
debt carried a fixed interest rate of 7.6%. The Partnership recognized a loss on
the early extinguishment of debt of approximately  $27,000, due to the write off
of unamortized loan costs and mortgage  discount.  Total  capitalized loan costs
for the new mortgage were approximately $214,000 at June 30, 2002.

Note E - Casualty Events

In November  2001,  Baymeadows  Apartments  experienced a fire which resulted in
damages of approximately $278,000.  Insurance proceeds of approximately $208,000
were received during the six months ended June 30, 2002 to cover the damages.  A
casualty gain of  approximately  $140,000 was  recognized  during the six months
ended June 30, 2002 as a result of the insurance  proceeds less the write-off of
the net book value of the destroyed assets of approximately $68,000.

During the six months ended June 30, 2001, a net casualty gain of  approximately
$20,000 was recorded at Quail Run  Apartments.  The  casualty  gain related to a
fire which  occurred on September 30, 1999. The gain was a result of the receipt
of insurance proceeds of approximately $28,000 and the write-off of the net book
value of the destroyed assets of approximately $8,000.

Note F - Legal Proceedings

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the Partnership,  its Corporate  General Partner and
several of their  affiliated  partnerships  and corporate  entities.  The action
purports  to  assert  claims  on  behalf  of a class  of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  which are named as nominal  defendants,  challenging,  among other
things,  the  acquisition  of interests  in certain  Corporate  General  Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one  time,  affiliates  of  Insignia;  past  tender  offers  by the  Insignia
affiliates to acquire limited partnership units;  management of the partnerships
by the  Insignia  affiliates;  and the series of  transactions  which  closed on
October 1, 1998 and February 26, 1999 whereby  Insignia and Insignia  Properties
Trust,  respectively,  were merged  into AIMCO.  The  plaintiffs  seek  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Corporate General Partner filed a motion seeking dismissal
of the action.  In lieu of responding  to the motion,  the  plaintiffs  filed an
amended complaint.  The Corporate General Partner filed demurrers to the amended
complaint which were heard February 1999.

Pending the ruling on such  demurrers,  settlement  negotiations  commenced.  On
November 2, 1999,  the parties  executed and filed a Stipulation  of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  at which time
the Court set a final  approval  hearing for  December  10,  1999.  Prior to the
December  10,  1999  hearing,  the  Court  received  various  objections  to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement.  On
December 14, 1999, the Corporate  General Partner and its affiliates  terminated
the  proposed  settlement.  In  February  2000,  counsel  for some of the  named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated  the  settlement.  On June  27,  2000,  the  Court  entered  an order
disqualifying  them  from the case and an  appeal  was  taken  from the order on
October 5, 2000. On December 4, 2000, the Court  appointed the law firm of Lieff
Cabraser  Heimann & Bernstein  LLP as new lead  counsel for  plaintiffs  and the
putative class.  Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001,  the  Corporate  General  Partner and its  affiliates  filed a
demurrer to the third amended  complaint.  On May 14, 2001,  the Court heard the
demurrer to the third amended  complaint.  On July 10, 2001, the Court issued an
order  sustaining  defendants'  demurrer on certain  grounds.  On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs  filed a fourth amended class and  derivative  action  complaint.  On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration.  On
October 5, 2001, the Corporate General Partner and affiliated defendants filed a
demurrer to the fourth amended complaint,  which was heard on December 11, 2001.
On February 2, 2002,  the Court served its order  granting in part the demurrer.
The  Court has  dismissed  without  leave to amend  certain  of the  plaintiffs'
claims.  On February 11, 2002,  plaintiffs  filed a motion  seeking to certify a
putative  class  comprised of all  non-affiliated  persons who own or have owned
units  in  the  partnerships.  The  Corporate  General  Partner  and  affiliated
defendants  oppose the motion.  On April 29,  2002,  the Court held a hearing on
plaintiffs' motion for class  certification and took the matter under submission
after further  briefing,  as ordered by the court, was submitted by the parties.
On July 10, 2002,  the Court entered an order vacating the current trial date of
January 13, 2003 (as well as the  pre-trial  and  discovery  cut-off  dates) and
stayed the case in its entirety through November 7, 2002 so that the parties can
have an opportunity to discuss settlement.

During the third  quarter of 2001, a complaint  (the "Heller  action") was filed
against  the same  defendants  that are named in the  Nuanes  action,  captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended  complaint.  The first amended complaint in the Heller action is
brought as a purported  derivative  action,  and asserts  claims for among other
things  breach  of  fiduciary  duty;  unfair  competition;   conversion,  unjust
enrichment;  and judicial  dissolution.  Plaintiffs in the Nuanes action filed a
motion to  consolidate  the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed  without  leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the Corporate  General Partner and affiliated
defendants  moved to strike the first  amended  complaint  in its  entirety  for
violating  the Court's July 10, 2001 order  granting in part and denying in part
defendants'  demurrer in the Nuanes action, or alternatively,  to strike certain
portions of the complaint based on the statute of limitations.  Other defendants
in the action  demurred to the fourth  amended  complaint,  and,  alternatively,
moved to strike the complaint. On December 11, 2001, the court heard argument on
the motions  and took the matters  under  submission.  On February 4, 2002,  the
Court  served  notice of its order  granting  defendants'  motion to strike  the
Heller complaint as a violation of its July 10, 2001 order in the Nuanes action.
On March 27, 2002,  the plaintiffs  filed a notice  appealing the order striking
the complaint. The parties are currently in the midst of briefing that appeal.

The Corporate General Partner does not anticipate that any costs,  whether legal
or  settlement  costs,  associated  with  these  cases will be  material  to the
Partnership's overall operations.

The  Partnership is unaware of any other pending or outstanding  litigation that
is not of a routine nature arising in the ordinary course of business.


Item 2.     Management's Discussion and Analysis or Plan of Operation

The  matters  discussed  in this Form  10-QSB  contain  certain  forward-looking
statements  and  involve  risks and  uncertainties  (including  changing  market
conditions,   competitive  and  regulatory   matters,   etc.)  detailed  in  the
disclosures  contained  in this  Form  10-QSB  and the  other  filings  with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussion of the  Registrant's  business and results of  operations,  including
forward-looking  statements  pertaining  to such  matters,  does not  take  into
account the effects of any changes to the  Registrant's  business and results of
operation.  Accordingly,  actual  results  could  differ  materially  from those
projected in the forward-looking  statements as a result of a number of factors,
including those identified herein.

The Partnership's  investment properties consist of two apartment complexes. The
following  table sets forth the average  occupancy of the properties for each of
the six months ended June 30, 2002 and 2001:

                                                             Average
                                                            Occupancy
       Property                                        2002          2001

       Baymeadows Apartments
         Jacksonville, Florida                         96%            95%

       Quail Run Apartments
         Columbia, South Carolina                      91%            93%

Results of Operations

The Registrant's net income for the three and six months ended June 30, 2002 was
approximately  $493,000 and  $751,000,  respectively,  compared to net income of
approximately  $173,000 and $335,000 for the three and six months ended June 30,
2001, respectively. The increase in net income for both the three and six months
ended June 30,  2002 is due to a decrease in total  expenses  and an increase in
total revenues. The decrease in total expenses is due to a decrease in operating
expense,   partially  offset  by  increases  in  depreciation  and  general  and
administrative   expenses   and  the   recognition   of  a  loss  on  the  early
extinguishment  of  debt  as a  result  of  the  refinancing  of  the  mortgages
encumbering  Quail  Run  Apartments  (as  discussed  below).  Operating  expense
decreased  primarily  due to  decreases  in  utilities,  maintenance,  corporate
housing and payroll  related  expenses at both of the  Partnership's  investment
properties.  The  decrease in  operating  expenses  was  partially  offset by an
increase in insurance expense at both properties. Depreciation expense increased
as a result of property  improvements and replacements being placed into service
at both properties during the past twelve months.

General  and  administrative   expenses  increased  as  a  result  of  increased
professional  fees necessary to manage the Partnership.  Included in general and
administrative   expenses  at  both  June  30,  2002  and  2001  are  management
reimbursements  to the Corporate  General  Partner allowed under the Partnership
Agreement.  In  addition,   costs  associated  with  the  quarterly  and  annual
communications  with  investors  and  regulatory  agencies  and the annual audit
required by the Partnership Agreement are also included.

The  increase in total  revenues for the three months ended June 30, 2002 is due
to an increase in the recognition of casualty gains (as discussed below). Rental
income and other income remained  relatively constant for the three months ended
June 30, 2002.

The increase in total  revenues for the six months ended June 30, 2002 is due to
an increase  in other  income and an  increase  in the  recognition  of casualty
gains,  partially offset by a decrease in rental income.  Other income increased
primarily   due  to  an  increase  in  lease   cancellation   fees  and  utility
reimbursements  at  Baymeadows  Apartments,  partially  offset by a decrease  in
corporate  housing  revenue at Quail Run  Apartments  and a decrease in interest
income. The casualty gain recognized in 2002 is a result of a November 2001 fire
at Baymeadows  Apartments which resulted in damages of  approximately  $278,000.
Insurance proceeds of approximately $208,000 were received during the six months
ended  June 30,  2002 to cover the  damages.  A casualty  gain of  approximately
$140,000 was recognized during the six months ended June 30, 2002 as a result of
the insurance proceeds less the write-off of the net book value of the destroyed
assets of  approximately  $68,000.  The casualty  gain  recognized  in 2001 is a
result of a September 1999 fire at Quail Run  Apartments.  The gain was a result
of the receipt of insurance proceeds of approximately  $28,000 and the write off
of the net book  value of the  destroyed  assets of  approximately  $8,000.  The
decrease in rental  income is primarily due to the decrease in occupancy and the
average rental rate at Quail Run Apartments and an increase in bad debt expense.
Rental  rates were  lowered  at Quail Run  Apartments  in an effort to  increase
occupancy.  The decrease in rental income was partially offset by an increase in
the average  rental  rate and the slight  increase in  occupancy  at  Baymeadows
Apartments.

As part of the ongoing business plan of the Partnership,  the Corporate  General
Partner  monitors  the  rental  market  environment  of each  of its  investment
properties  to assess  the  feasibility  of  increasing  rents,  maintaining  or
increasing  occupancy  levels and protecting the  Partnership  from increases in
expenses.  As part of this plan,  the  Corporate  General  Partner  attempts  to
protect  the  Partnership  from the  burden of  inflation-related  increases  in
expenses by increasing  rents and  maintaining a high overall  occupancy  level.
However,  due to  changing  market  conditions,  which can  result in the use of
rental  concessions and rental reductions to offset softening market conditions,
there is no guarantee that the Corporate General Partner will be able to sustain
such a plan.

Liquidity and Capital Resources

At June 30, 2002, the Partnership had cash and cash equivalents of approximately
$779,000,  compared to approximately  $492,000 at June 30, 2001. The increase in
cash and cash  equivalents  of  approximately  $262,000 for the six months ended
June 30, 2002, from the Partnership's calendar year end, is due to approximately
$1,579,000  of cash  provided  by  operating  activities,  partially  offset  by
approximately  $819,000 of cash used in financing  activities and  approximately
$498,000 of cash used in investing activities. Cash used in financing activities
consisted  primarily of the  repayment of the  mortgages  encumbering  Quail Run
Apartments,  distributions  to  partners  and, to a lesser  extent,  payments of
principal made on the mortgages encumbering the Partnership's  properties,  loan
costs paid and the  repayment of advances  from an  affiliate  of the  Corporate
General  Partner,  partially  offset by proceeds  from mortgage note payable and
advances  from an  affiliate  of the  Corporate  General  Partner.  Cash used in
investing  activities  consisted  of  property  improvements  and  replacements,
partially offset by net receipts from escrow accounts maintained by the mortgage
lender and net insurance proceeds received.  The Partnership invests its working
capital reserves in interest bearing accounts.

The sufficiency of existing  liquid assets to meet future  liquidity and capital
expenditure   requirements   is  directly   related  to  the  level  of  capital
expenditures  required at the investment  properties to adequately  maintain the
physical  assets and other operating needs of the Partnership and to comply with
Federal, state and local legal and regulatory requirements. Capital improvements
planned for each of the Registrant's properties are detailed below.

Baymeadows  Apartments:  The  Partnership  has budgeted,  but is not limited to,
approximately  $1,556,000 in capital  improvements at Baymeadows  Apartments for
2002 consisting primarily of roof replacement,  structural  improvements,  major
landscaping,  light fixtures, parking lot improvements,  plumbing,  recreational
facility  upgrades,  wall coverings,  signage,  air  conditioning and electrical
upgrades and cabinet, appliance and floor covering replacements.  As of June 30,
2002 the Partnership has spent  approximately  $986,000  (including  nonbudgeted
additions  due  to  a  casualty)  consisting  primarily  of  roof  replacements,
plumbing,   electrical   upgrades,   cabinet   replacements,    floor   covering
replacements,  structural  improvements,  recreational  facility  upgrades,  air
conditioning  upgrades,  and construction related to the 2001 casualties.  These
improvements  were funded from replacement  reserves,  insurance  proceeds,  and
operating cash flow.  Additional  improvements may be considered and will depend
on the physical  condition of the property as well as  replacement  reserves and
anticipated cash flow generated by the property.

Quail Run  Apartments:  The  Partnership  has  budgeted,  but is not limited to,
approximately  $166,000 in capital improvements at Quail Run Apartments for 2002
consisting  primarily  of  structural  upgrades,   air  conditioning   upgrades,
appliances and floor covering replacements.  As of June 30, 2002 the Partnership
has  spent  approximately   $62,000  consisting   primarily  of  floor  covering
replacements and appliances.  These improvements were funded from operating cash
flow. Additional  improvements may be considered and will depend on the physical
condition of the property as well as replacement  reserves and anticipated  cash
flow generated by the property.

The additional  capital  expenditures will be incurred only if cash is available
from  operations  and  Partnership  reserves.  To the extent that such  budgeted
capital improvements are completed, the Registrant's distributable cash flow, if
any, may be adversely affected at least in the short term.

The  Registrant's  current assets are thought to be sufficient for any near term
needs (exclusive of capital  improvements) of the Registrant.  On June 14, 2002,
the  Partnership  refinanced the mortgage notes at Quail Run  Apartments.  Gross
proceeds from the refinancing were $8,450,000 of which approximately  $4,963,000
was used to repay the existing  mortgage  notes.  The new note requires  monthly
principal  and  interest  payments of  approximately  $65,000 at a fixed rate of
7.16% and matures  July 1, 2022 at which time the loan will be fully  amortized.
The old debt carried a fixed interest rate of 7.6%. The Partnership recognized a
loss on the early  extinguishment of debt of approximately  $27,000,  due to the
write off of unamortized  loan costs and mortgage  discount.  Total  capitalized
loan costs for the new mortgage were approximately $214,000 at June 30, 2002.

The mortgage indebtedness at Baymeadows Apartments of approximately $12,194,000,
net of  discount,  is  amortized  over 257  months  with a  balloon  payment  of
approximately $12,048,000 due on November 15, 2002. The Partnership is currently
planning on refinancing the debt encumbering  Baymeadows Apartments prior to its
November 2002 maturity.  If the property  cannot be  refinanced,  the Registrant
will risk losing such property through foreclosure.

The Partnership  distributed  the following  amounts during the six months ended
June 30, 2002 and 2001 (in thousands except per unit data):
<TABLE>
<CAPTION>

                      Six Months      Per Limited       Six Months      Per Limited
                        Ended         Partnership         Ended         Partnership
                    June 30, 2002         Unit        June 30, 2001         Unit

<S>  <C>                <C>              <C>              <C>              <C>
Sale (1)                $ 424            $ 8.48           $ 666            $13.32
Refinancing (2)          3,265            65.31               --               --
                        $3,689           $73.79           $ 666            $13.32
</TABLE>

(1)   From undistributed  proceeds of the sale of Countrywood Village Apartments
      in August 2000.

(2)   From the refinancing of the debt encumbering  Quail Run Apartments in June
      2002.

Future cash  distributions  will depend on the levels of net cash generated from
operations, the availability of cash reserves and the timing of debt maturities,
refinancings,  and/or  property  sales.  The  Partnership's  cash  available for
distribution is reviewed on a monthly basis.  There can be no assurance that the
Partnership  will generate  sufficient  funds from  operations,  after  required
capital expenditures, to permit any additional distributions to its partners for
the remainder of 2002 or subsequent periods. In addition, the Partnership may be
restricted  from making  distributions  if the amount in the reserve account for
Baymeadows Apartments is less than $400 per apartment unit at such property or a
total of  approximately  $362,000.  As of June 30, 2002, the reserve account was
fully funded with approximately $905,000 on deposit with the mortgage lender.

Other

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership,  AIMCO and its affiliates  owned 34,181 limited  partnership  units
(the "Units") in the Partnership representing 68.37% of the outstanding units at
June 30, 2002. A number of these units were  acquired  pursuant to tender offers
made by AIMCO or its  affiliates.  It is possible  that AIMCO or its  affiliates
will acquire additional units of limited partnership interest in the Partnership
in  exchange  for  cash or a  combination  of cash and  units  in the  operating
partnership of AIMCO.  In this regard,  on June 25, 2002 a tender offer by AIMCO
Properties, L.P., to acquire any and all of the Units not owned by affiliates of
AIMCO for a purchase price of $387.00 per Unit expired.  Pursuant to this offer,
AIMCO  acquired  1,191 Units during the quarter  ended June 30, 2002.  Under the
Partnership Agreement,  unitholders holding a majority of the Units are entitled
to take action with respect to a variety of matters,  which would include voting
on certain  amendments  to the  Partnership  Agreement  and voting to remove the
Corporate  General  Partner.  As a result  of its  ownership  of  68.37%  of the
outstanding  Units,  AIMCO is in a position to control all such voting decisions
with respect to the  Registrant.  Although the  Corporate  General  Partner owes
fiduciary  duties to the limited  partners  of the  Partnership,  the  Corporate
General Partner also owed fiduciary duties to AIMCO as its sole stockholder.  As
a result,  the duties of the Corporate  General  Partner,  as corporate  general
partner,  to the  Partnerships  and its limited  partners may come into conflict
with  the  duties  of the  Corporate  General  Partner  to  AIMCO,  as its  sole
stockholder.

Critical Accounting Policies and Estimates

The consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States which require the Partnership
to  make  estimates  and  assumptions.  The  Partnership  believes  that  of its
significant  accounting  policies,  the following may involve a higher degree of
judgment and complexity.

Impairment of Long-Lived Assets

Investment  properties  are  recorded at cost,  less  accumulated  depreciation,
unless  considered  impaired.  If  events  or  circumstances  indicate  that the
carrying  amount of a property may be  impaired,  the  Partnership  will make an
assessment of its  recoverability  by estimating  the  undiscounted  future cash
flows,  excluding  interest  charges,  of the property.  If the carrying  amount
exceeds the aggregate  future cash flows,  the  Partnership  would  recognize an
impairment  loss to the extent the carrying amount exceeds the fair value of the
property.

Real  property  investments  are  subject  to varying  degrees of risk.  Several
factors  may  adversely  affect  the  economic  performance  and  value  of  the
Partnership's  investment  properties.  These  factors  include  changes  in the
national,  regional and local economic  climate;  local  conditions,  such as an
oversupply  of  multifamily   properties;   competition   from  other  available
multifamily  property  owners and changes in market  rental  rates.  Any adverse
changes in these factors could cause an impairment in the Partnership's assets.

Revenue Recognition

The Partnership generally leases apartment units for twelve-month terms or less.
Rental income  attributable to leases is recognized monthly as it is earned. The
Partnership will offer rental concessions during  particularly slow months or in
response  to  heavy  competition  from  other  similar  complexes  in the  area.
Concessions are charged to income as incurred.



<PAGE>


                           PART II - OTHER INFORMATION


ITEM 1.     LEGAL PROCEEDINGS

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the Partnership,  its Corporate  General Partner and
several of their  affiliated  partnerships  and corporate  entities.  The action
purports  to  assert  claims  on  behalf  of a class  of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  which are named as nominal  defendants,  challenging,  among other
things,  the  acquisition  of interests  in certain  Corporate  General  Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one  time,  affiliates  of  Insignia;  past  tender  offers  by the  Insignia
affiliates to acquire limited partnership units;  management of the partnerships
by the  Insignia  affiliates;  and the series of  transactions  which  closed on
October 1, 1998 and February 26, 1999 whereby  Insignia and Insignia  Properties
Trust,  respectively,  were merged  into AIMCO.  The  plaintiffs  seek  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Corporate General Partner filed a motion seeking dismissal
of the action.  In lieu of responding  to the motion,  the  plaintiffs  filed an
amended complaint.  The Corporate General Partner filed demurrers to the amended
complaint which were heard February 1999.

Pending the ruling on such  demurrers,  settlement  negotiations  commenced.  On
November 2, 1999,  the parties  executed and filed a Stipulation  of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  at which time
the Court set a final  approval  hearing for  December  10,  1999.  Prior to the
December  10,  1999  hearing,  the  Court  received  various  objections  to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement.  On
December 14, 1999, the Corporate  General Partner and its affiliates  terminated
the  proposed  settlement.  In  February  2000,  counsel  for some of the  named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated  the  settlement.  On June  27,  2000,  the  Court  entered  an order
disqualifying  them  from the case and an  appeal  was  taken  from the order on
October 5, 2000. On December 4, 2000, the Court  appointed the law firm of Lieff
Cabraser  Heimann & Bernstein  LLP as new lead  counsel for  plaintiffs  and the
putative class.  Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001,  the  Corporate  General  Partner and its  affiliates  filed a
demurrer to the third amended  complaint.  On May 14, 2001,  the Court heard the
demurrer to the third amended  complaint.  On July 10, 2001, the Court issued an
order  sustaining  defendants'  demurrer on certain  grounds.  On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs  filed a fourth amended class and  derivative  action  complaint.  On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration.  On
October 5, 2001, the Corporate General Partner and affiliated defendants filed a
demurrer to the fourth amended complaint,  which was heard on December 11, 2001.
On February 2, 2002,  the Court served its order  granting in part the demurrer.
The  Court has  dismissed  without  leave to amend  certain  of the  plaintiffs'
claims.  On February 11, 2002,  plaintiffs  filed a motion  seeking to certify a
putative  class  comprised of all  non-affiliated  persons who own or have owned
units  in  the  partnerships.  The  Corporate  General  Partner  and  affiliated
defendants  oppose the motion.  On April 29,  2002,  the Court held a hearing on
plaintiffs' motion for class  certification and took the matter under submission
after further  briefing,  as ordered by the court, was submitted by the parties.
On July 10, 2002,  the Court entered an order vacating the current trial date of
January 13, 2003 (as well as the  pre-trial  and  discovery  cut-off  dates) and
stayed the case in its entirety through November 7, 2002 so that the parties can
have an opportunity to discuss settlement.

During the third  quarter of 2001, a complaint  (the "Heller  action") was filed
against  the same  defendants  that are named in the  Nuanes  action,  captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended  complaint.  The first amended complaint in the Heller action is
brought as a purported  derivative  action,  and asserts  claims for among other
things  breach  of  fiduciary  duty;  unfair  competition;   conversion,  unjust
enrichment;  and judicial  dissolution.  Plaintiffs in the Nuanes action filed a
motion to  consolidate  the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed  without  leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the Corporate  General Partner and affiliated
defendants  moved to strike the first  amended  complaint  in its  entirety  for
violating  the Court's July 10, 2001 order  granting in part and denying in part
defendants'  demurrer in the Nuanes action, or alternatively,  to strike certain
portions of the complaint based on the statute of limitations.  Other defendants
in the action  demurred to the fourth  amended  complaint,  and,  alternatively,
moved to strike the complaint. On December 11, 2001, the court heard argument on
the motions  and took the matters  under  submission.  On February 4, 2002,  the
Court  served  notice of its order  granting  defendants'  motion to strike  the
Heller complaint as a violation of its July 10, 2001 order in the Nuanes action.
On March 27, 2002,  the plaintiffs  filed a notice  appealing the order striking
the complaint. The parties are currently in the midst of briefing that appeal.

The Corporate General Partner does not anticipate that any costs,  whether legal
or  settlement  costs,  associated  with  these  cases will be  material  to the
Partnership's overall operations.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            a)    Exhibits:

                  Exhibit 3, Amended and Restated  Certificate  and  Agreement
                  of  Limited   Partnership   (Exhibit  A  to  the  Prospectus
                  included in  Registrant's  Amendment  No. 1 to  Registration
                  Statement,  filed  June  8,  1982  (File  No.  2-77217),  is
                  incorporated herein by reference).

                  Exhibit  10(iii) g,  Multifamily  Note dated June 14,  2002,
                  between  Shelter  Properties  IV  and  Keycorp  Real  Estate
                  Capital Markets, Inc. for Quail Run Apartments.

                  Exhibit 99,  Certification  of Chief  Executive  Officer and
                  Chief Financial Officer.

            b)    Reports on Form 8-K filed  during the  quarter  ended June 30,
                  2002:

                  None.


<PAGE>


                                   SIGNATURES



In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.



                                    SHELTER PROPERTIES IV


                                    By:   Shelter Realty IV Corporation
                                          Corporate General Partner


                                    By:   /s/Patrick J. Foye
                                          Patrick J. Foye
                                          Executive Vice President


                                    By:   /s/Thomas C. Novosel
                                          Thomas C. Novosel
                                          Senior Vice President
                                          and Chief Accounting Officer


                                    Date: August 14, 2002


<PAGE>


Exhibit 99


                          Certification of CEO and CFO
                     Pursuant to 18 U.S.C. Section 1350,
                            As Adopted Pursuant to
                Section 906 of the Sarbanes-Oxley Act of 2002



In connection with the Quarterly Report on Form 10-QSB of Shelter  Properties IV
Limited Partnership (the "Partnership"), for the quarterly period ended June 30,
2002 as filed with the  Securities  and Exchange  Commission  on the date hereof
(the  "Report"),  Patrick  J. Foye,  as the  equivalent  of the Chief  Executive
Officer of the  Partnership,  and Paul J.  McAuliffe,  as the  equivalent of the
Chief Financial Officer of the Partnership,  each hereby certifies,  pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that, to the best of his knowledge:

      (1)   The Report fully complies with the  requirements of Section 13(a) or
            15(d) of the Securities Exchange Act of 1934; and

      (2)   The  information  contained in the Report  fairly  presents,  in all
            material respects, the financial condition and results of operations
            of the Partnership.


                                    /s/  Patrick J. Foye
                                    Name:  Patrick J. Foye
                                    Date:  August 14, 2002


                                    /s/  Paul J. McAuliffe
                                    Name:  Paul J. McAuliffe
                                    Date:  August 14, 2002


This  certification  accompanies  the  Report  pursuant  to  Section  906 of the
Sarbanes-Oxley  Act of 2002 and shall not,  except to the extent required by the
Sarbanes-Oxley  Act of 2002, be deemed filed by the  Partnership for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended.



<PAGE>

                                                      FHLMC Loan No. 002592878


                               MULTIFAMILY NOTE
                    (MULTISTATE - REVISION DATE 11-01-2000)

US $8,450,000.00                                                 June ___, 2002,


      FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if
more than one)  promises  to pay to the order of  KEYCORP  REAL  ESTATE  CAPITAL
MARKETS,  INC.,  an Ohio  corporation,  the  principal sum of Eight Million Four
Hundred Fifty Thousand and No/100 Dollars (US  $8,450,000.00),  with interest on
the  unpaid  principal  balance at the  annual  rate of Six and  94/100  percent
(6.94%).

      1. Defined  Terms.  As used in this Note,  (i) the term "Lender" means the
holder of this Note,  and (ii) the term  "Indebtedness"  means the principal of,
interest  on,  and any other  amounts  due at any time  under,  this  Note,  the
Security Instrument or any other Loan Document,  including  prepayment premiums,
late  charges,  default  interest,  and  advances to protect the security of the
Security  Instrument  under  Section 12 of the  Security  Instrument.  "Event of
Default"  and other  capitalized  terms used but not  defined in this Note shall
have the meanings given to such terms in the Security Instrument.

      2.    Address for Payment.  All payments due under this Note shall be
payable at KeyCorp Real Estate Capital Markets, Inc., c/o Key Commercial
Mortgage, P.O. Box 801649, Kansas City, Missouri  64180-1649, or such other
place as may be designated by written notice to Borrower from or on behalf of
Lender.

      3.    Payment of Principal and Interest.  Principal and interest shall
be paid as follows:

      (a) Unless  disbursement of principal is made by Lender to Borrower on the
first  day of the  month,  interest  for the  period  beginning  on the  date of
disbursement and ending on and including the last day of the month in which such
disbursement is made shall be payable  simultaneously with the execution of this
Note.  Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.

      (b) Consecutive  monthly  installments of principal and interest,  each in
the amount of  Sixty-Five  Thousand  Two  Hundred  Eight and 78/100  Dollars (US
$65,208.78), shall be payable on the first day of each month beginning on August
1, 2002,  until the entire unpaid  principal  balance  evidenced by this Note is
fully paid.

      (c) Any accrued  interest  remaining  past due for 30 days or more may, at
Lender's discretion, be added to and become part of the unpaid principal balance
and shall bear  interest at the rate or rates  specified  in this Note,  and any
reference below to "accrued  interest" shall refer to accrued interest which has
not become part of the unpaid  principal  balance.  Any remaining  principal and
interest  shall be due and  payable  on July 1, 2022 or on any  earlier  date on
which the unpaid  principal  balance of this Note  becomes due and  payable,  by
acceleration or otherwise (the "Maturity  Date").  The unpaid principal  balance
shall  continue to bear interest after the Maturity Date at the Default Rate set
forth in this Note until and including the date on which it is paid in full.

      (d) Any regularly  scheduled monthly installment of principal and interest
that is  received  by Lender  before  the date it is due shall be deemed to have
been  received on the due date solely for the  purpose of  calculating  interest
due.

      4. Application of Payments. If at any time Lender receives,  from Borrower
or otherwise,  any amount applicable to the Indebtedness  which is less than all
amounts due and payable at such time,  Lender may apply that  payment to amounts
then due and  payable in any manner and in any order  determined  by Lender,  in
Lender's  discretion.  Borrower  agrees that neither  Lender's  acceptance  of a
payment  from  Borrower in an amount that is less than all amounts  then due and
payable nor Lender's  application of such payment shall  constitute or be deemed
to  constitute  either  a  waiver  of  the  unpaid  amounts  or  an  accord  and
satisfaction.

      5.  Security.  The  Indebtedness  is  secured,  among other  things,  by a
multifamily mortgage,  deed to secure debt or deed of trust dated as of the date
of this Note (the "Security Instrument"),  and reference is made to the Security
Instrument for other rights of Lender as to collateral for the Indebtedness.

      6.  Acceleration.  If an Event of Default has occurred and is  continuing,
the entire  unpaid  principal  balance,  any accrued  interest,  the  prepayment
premium  payable under Paragraph 10, if any, and all other amounts payable under
this Note and any other Loan Document  shall at once become due and payable,  at
the option of Lender,  without any prior notice to Borrower (except if notice is
required by applicable  law,  then after such notice).  Lender may exercise this
option to accelerate regardless of any prior forbearance.

      7. Late Charge. If any monthly amount payable under this Note or under the
Security  Instrument or any other Loan Document is not received by Lender within
ten (10) days after the amount is due (unless  applicable  law requires a longer
period of time before a late  charge may be imposed,  in which event such longer
period shall be  substituted),  Borrower  shall pay to Lender,  immediately  and
without  demand by Lender,  a late  charge  equal to five  percent  (5%) of such
amount  (unless  applicable  law requires a lesser  amount be charged,  in which
event such lesser amount shall be substituted).  Borrower  acknowledges that its
failure to make timely payments will cause Lender to incur  additional  expenses
in servicing and processing  the loan  evidenced by this Note (the "Loan"),  and
that it is extremely  difficult and  impractical to determine  those  additional
expenses.  Borrower  agrees  that  the  late  charge  payable  pursuant  to this
Paragraph  represents a fair and  reasonable  estimate,  taking into account all
circumstances  existing  on the date of this Note,  of the  additional  expenses
Lender will incur by reason of such late payment.  The late charge is payable in
addition  to,  and not in lieu of, any  interest  payable  at the  Default  Rate
pursuant to Paragraph 8.

      8. Default  Rate. So long as (a) any monthly  installment  under this Note
remains past due for thirty (30) days or more, or (b) any other Event of Default
has occurred  and is  continuing,  interest  under this Note shall accrue on the
unpaid  principal  balance  from the earlier of the due date of the first unpaid
monthly  installment  or the  occurrence  of such  other  Event of  Default,  as
applicable,  at a rate  (the  "Default  Rate")  equal to the  lesser of four (4)
percentage  points above the rate stated in the first paragraph of this Note and
the maximum  interest rate which may be collected from Borrower under applicable
law. If the unpaid  principal  balance and all accrued  interest are not paid in
full on the Maturity Date, the unpaid principal balance and all accrued interest
shall bear interest  from the Maturity  Date at the Default Rate.  Borrower also
acknowledges that its failure to make timely payments will cause Lender to incur
additional  expenses in servicing and processing the Loan, that, during the time
that any monthly  installment under this Note is delinquent for more than thirty
(30) days, Lender will incur additional costs and expenses arising from its loss
of the use of the money due and from the adverse  impact on Lender's  ability to
meet  its  other   obligations  and  to  take  advantage  of  other   investment
opportunities,  and that it is extremely  difficult and impractical to determine
those additional costs and expenses. Borrower also acknowledges that, during the
time that any monthly  installment  under this Note is delinquent  for more than
thirty (30) days or any other Event of Default has occurred  and is  continuing,
Lender's risk of nonpayment of this Note will be materially increased and Lender
is entitled to be compensated for such increased risk.  Borrower agrees that the
increase in the rate of  interest  payable  under this Note to the Default  Rate
represents a fair and reasonable estimate, taking into account all circumstances
existing on the date of this Note, of the additional  costs and expenses  Lender
will incur by reason of the  Borrower's  delinquent  payment and the  additional
compensation Lender is entitled to receive for the increased risks of nonpayment
associated with a delinquent loan.

      9.    Limits on Personal Liability.

      (a) Except as otherwise  provided in this Paragraph 9, Borrower shall have
no personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the  Indebtedness  or for the  performance  of any
other  obligations  of Borrower  under the Loan  Documents,  and  Lender's  only
recourse for the  satisfaction of the  Indebtedness  and the performance of such
obligations  shall be Lender's  exercise of its rights and remedies with respect
to the Mortgaged  Property and any other  collateral  held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair  Lender's  enforcement  of  its  rights  against  any  guarantor  of  the
Indebtedness or any guarantor of any obligations of Borrower.

      (b) Borrower  shall be personally  liable to Lender for the repayment of a
portion of the Indebtedness equal to zero percent (0%) of the original principal
balance of this Note,  plus any other  amounts for which  Borrower  has personal
liability under this Paragraph 9.

      (c) In addition to Borrower's  personal  liability  under  Paragraph 9(b),
Borrower  shall be  personally  liable to Lender for the  repayment of a further
portion of the Indebtedness  equal to any loss or damage suffered by Lender as a
result of (1) failure of Borrower to pay to Lender upon demand after an Event of
Default all Rents to which Lender is entitled under Section 3(a) of the Security
Instrument  and the amount of all security  deposits  collected by Borrower from
tenants  then in  residence;  (2)  failure of  Borrower  to apply all  insurance
proceeds and condemnation  proceeds as required by the Security  Instrument;  or
(3)  failure of Borrower to comply  with  Section  14(d) or (e) of the  Security
Instrument relating to the delivery of books and records, statements,  schedules
and reports.

      (d) For  purposes  of  determining  Borrower's  personal  liability  under
Paragraph  9(b)  and  Paragraph  9(c),  all  payments  made by  Borrower  or any
guarantor of this Note with respect to the Indebtedness and all amounts received
by Lender from the enforcement of its rights under the Security Instrument shall
be applied first to the portion of the  Indebtedness  for which  Borrower has no
personal liability.

      (e) Borrower shall become personally liable to Lender for the repayment of
all of the  Indebtedness  upon the occurrence of any of the following  Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not  permitted  by  Section  33 of  the  Security  Instrument;  (2)  a  Transfer
(including,  but not  limited  to,  a lien or  encumbrance)  that is an Event of
Default  under  Section  21 of the  Security  Instrument,  other than a Transfer
consisting  solely of the  involuntary  removal or  involuntary  withdrawal of a
general  partner in a limited  partnership  or a manager in a limited  liability
company; or (3) fraud or written material  misrepresentation  by Borrower or any
officer,  director,  partner,  member or employee of Borrower in connection with
the  application  for or  creation  of the  Indebtedness  or any request for any
action or consent by Lender.

      (f) In addition to any personal  liability for the Indebtedness,  Borrower
shall  be  personally  liable  to  Lender  for  (1)  the  performance  of all of
Borrower's  obligations under Section 18 of the Security Instrument (relating to
environmental  matters);  (2) the costs of any audit under  Section 14(d) of the
Security  Instrument;  and (3) any  costs  and  expenses  incurred  by Lender in
connection  with the  collection of any amount for which  Borrower is personally
liable under this  Paragraph  9,  including  fees and out of pocket  expenses of
attorneys and expert witnesses and the costs of conducting any independent audit
of Borrower's  books and records to determine the amount for which  Borrower has
personal liability.

      (g)  To the  extent  that  Borrower  has  personal  liability  under  this
Paragraph 9, Lender may exercise its rights against Borrower  personally without
regard to whether Lender has exercised any rights against the Mortgaged Property
or any other security,  or pursued any rights against any guarantor,  or pursued
any other rights  available to Lender under this Note, the Security  Instrument,
any other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or  permitted by the  Security  Instrument  prior to the
occurrence  of an  Event of  Default  or (2)  Borrower  was  unable  to apply as
required  or  permitted  by the  Security  Instrument  because of a  bankruptcy,
receivership, or similar judicial proceeding. To the fullest extent permitted by
applicable  law, in any action to enforce  Borrower's  personal  liability under
this  Paragraph  9,  Borrower  waives  any  right  to set off the  value  of the
Mortgaged Property against such personal liability.

      10.   Voluntary and Involuntary Prepayments.

      (a)  A  prepayment  premium  shall  be  payable  in  connection  with  any
prepayment (any receipt by Lender of principal, other than principal required to
be paid in  monthly  installments  pursuant  to  Paragraph  3(b),  prior  to the
scheduled Maturity Date set forth in Paragraph 3(c)) under this Note as provided
below:

            (1)  Borrower  may  voluntarily  prepay all of the unpaid  principal
balance  of this  Note  on a  Business  Day  designated  as the  date  for  such
prepayment  in a written  notice from  Borrower to Lender given at least 30 days
prior to the date of such  prepayment.  Such prepayment  shall be made by paying
(A) the amount of principal  being prepaid,  (B) all accrued  interest,  (C) all
other sums due  Lender at the time of such  prepayment,  and (D) the  prepayment
premium  calculated  pursuant to Paragraph 10(c). For all purposes including the
accrual of interest, any prepayment received by Lender on any day other than the
last calendar day of the month shall be deemed to have been received on the last
calendar day of such month.  For  purposes of this Note, a "Business  Day" means
any day other than a  Saturday,  Sunday or any other day on which  Lender is not
open for business. Unless expressly provided for in the Loan Documents, Borrower
shall not have the  option to  voluntarily  prepay  less than all of the  unpaid
principal balance.  However, if a partial prepayment is provided for in the Loan
Documents or is accepted by Lender in Lender's discretion,  a prepayment premium
calculated pursuant to Paragraph 10(c) shall be due and payable by Borrower.

            (2) Upon Lender's  exercise of any right of acceleration  under this
Note,  Borrower shall pay to Lender,  in addition to the entire unpaid principal
balance  of this  Note  outstanding  at the  time of the  acceleration,  (A) all
accrued interest and all other sums due Lender,  and (B) the prepayment  premium
calculated pursuant to Paragraph 10(c).

            (3) Any application by Lender of any collateral or other security to
the repayment of any portion of the unpaid principal  balance of this Note prior
to the Maturity Date and in the absence of acceleration  shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium.

      (b)  Notwithstanding  the  provisions  of Paragraph  10(a),  no prepayment
premium  shall be payable  with  respect to (A) any  prepayment  made during the
period from one hundred eighty (180) days before the scheduled  Maturity Date to
the scheduled Maturity Date, or (B) any prepayment  occurring as a result of the
application of any insurance  proceeds or condemnation  award under the Security
Instrument.

      (c) Any  prepayment  premium  payable under this Note shall be computed as
follows:

            (1) If the  prepayment is made between the date of this Note and the
date that is one hundred  eighty  (180)  months after the first day of the first
calendar month following the date of this Note (the "Yield Maintenance Period"),
the prepayment  premium shall be whichever is the greater of  subparagraphs  (i)
and (ii) below:

            (i)   1.0% of the unpaid principal balance of this Note; or

            (ii)  the product obtained by multiplying:

                  (A) the amount of principal  being prepaid,  by (B) the excess
                  (if any) of the Monthly Note Rate over the Assumed
                        Reinvestment Rate,
                  by
                  (C)   the Present Value Factor.

            For purposes of subparagraph  (ii), the following  definitions shall
            apply:

            Monthly Note Rate: one-twelfth (1/12) of the annual interest rate
            of this Note, expressed as a decimal calculated to five digits.

            Prepayment Date: in the case of a voluntary prepayment,  the date on
            which the  prepayment  is made;  in the case of the  application  by
            Lender of  collateral  or  security  to a portion  of the  principal
            balance,  the date of such  application;  and in any other case, the
            date on which Lender  accelerates  the unpaid  principal  balance of
            this Note.

            Assumed  Reinvestment Rate:  one-twelfth (1/12) of the yield rate as
            of the date 5 Business  Days  before  the  Prepayment  Date,  on the
            8.750% U.S. Treasury Security due May, 2017, as reported in The Wall
            Street Journal, expressed as a decimal calculated to five digits. In
            the event that no yield is published on the applicable  date for the
            Treasury Security used to determine the Assumed  Reinvestment  Rate,
            Lender,  in its discretion,  shall select the non-callable  Treasury
            Security  maturing  in  the  same  year  as  the  Treasury  Security
            specified  above with the lowest yield  published in The Wall Street
            Journal as of the applicable  date. If the publication of such yield
            rates in The Wall  Street  Journal is  discontinued  for any reason,
            Lender  shall select a security  with a comparable  rate and term to
            the Treasury  Security  used to determine  the Assumed  Reinvestment
            Rate.  The  selection  of an  alternate  security  pursuant  to this
            Paragraph shall be made in Lender's discretion.

            Present Value Factor: the factor that discounts to present value the
            costs  resulting  to Lender from the  difference  in interest  rates
            during the months remaining in the Yield Maintenance  Period,  using
            the Assumed  Reinvestment  Rate as the discount  rate,  with monthly
            compounding, expressed numerically as follows:

            n = number of months remaining in Yield Maintenance Period

            ARR = Assumed Reinvestment Rate

            (2) If the  prepayment  is made  after the  expiration  of the Yield
Maintenance  Period but before the period set forth in Paragraph 10(b)(A) above,
the  prepayment  premium shall be 1.0% of the unpaid  principal  balance of this
Note.

      (d) Any permitted or required prepayment of less than the unpaid principal
balance of this Note shall not extend or postpone the due date of any subsequent
monthly  installments or change the amount of such  installments,  unless Lender
agrees otherwise in writing.

      (e)  Borrower  recognizes  that any  prepayment  of the  unpaid  principal
balance of this Note,  whether  voluntary or  involuntary  or  resulting  from a
default  by  Borrower,   will  result  in  Lender's  incurring  loss,  including
reinvestment loss,  additional expense and frustration or impairment of Lender's
ability to meet its  commitments  to third  parties.  Borrower  agrees to pay to
Lender  upon demand  damages for the  detriment  caused by any  prepayment,  and
agrees that it is extremely difficult and impractical to ascertain the extent of
such damages.  Borrower  therefore  acknowledges and agrees that the formula for
calculating  prepayment  premiums set forth in this Note represents a reasonable
estimate of the damages Lender will incur because of a prepayment.

      (f) Borrower further  acknowledges that the prepayment  premium provisions
of this  Note  are a  material  part of the  consideration  for  the  Loan,  and
acknowledges that the terms of this Note are in other respects more favorable to
Borrower as a result of the  Borrower's  voluntary  agreement to the  prepayment
premium provisions.

      11. Costs and Expenses.  To the fullest extent allowed by applicable  law,
Borrower  shall pay all expenses  and costs,  including  fees and  out-of-pocket
expenses  of  attorneys  (including  Lender's  in-house  attorneys)  and  expert
witnesses  and  costs of  investigation,  incurred  by Lender as a result of any
default under this Note or in connection  with efforts to collect any amount due
under  this  Note,  or to  enforce  the  provisions  of any of  the  other  Loan
Documents,  including those incurred in post-judgment  collection efforts and in
any  bankruptcy  proceeding  (including any action for relief from the automatic
stay of any  bankruptcy  proceeding)  or  judicial or  non-judicial  foreclosure
proceeding.

      12.  Forbearance.  Any  forbearance  by Lender in exercising  any right or
remedy under this Note, the Security  Instrument,  or any other Loan Document or
otherwise  afforded by applicable  law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy.  The  acceptance by Lender of any
payment after the due date of such  payment,  or in an amount which is less than
the required payment,  shall not be a waiver of Lender's right to require prompt
payment  when due of all other  payments or to exercise any right or remedy with
respect to any  failure to make  prompt  payment.  Enforcement  by Lender of any
security for  Borrower's  obligations  under this Note shall not  constitute  an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.

      13. Waivers.  Presentment,  demand, notice of dishonor, protest, notice of
acceleration,  notice of intent to demand or  accelerate  payment  or  maturity,
presentment  for  payment,  notice  of  nonpayment,   grace,  and  diligence  in
collecting  the  Indebtedness  are  waived by  Borrower  and all  endorsers  and
guarantors of this Note and all other third party obligors.

      14. Loan  Charges.  Neither this Note nor any of the other Loan  Documents
shall be construed to create a contract for the use, forbearance or detention of
money requiring  payment of interest at a rate greater than the maximum interest
rate  permitted  to be charged  under  applicable  law.  If any  applicable  law
limiting the amount of interest or other charges  permitted to be collected from
Borrower in  connection  with the Loan is  interpreted  so that any  interest or
other charge provided for in any Loan Document, whether considered separately or
together with other charges  provided for in any other Loan  Document,  violates
that law, and Borrower is entitled to the benefit of that law,  that interest or
charge is hereby reduced to the extent  necessary to eliminate  that  violation.
The  amounts,  if any,  previously  paid to Lender  in  excess of the  permitted
amounts  shall be applied by Lender to reduce  the unpaid  principal  balance of
this Note.  For the purpose of  determining  whether any applicable law limiting
the amount of interest or other charges  permitted to be collected from Borrower
has been violated,  all Indebtedness that constitutes  interest,  as well as all
other charges made in connection with the Indebtedness that constitute interest,
shall be deemed to be allocated  and spread  ratably over the stated term of the
Note. Unless otherwise required by applicable law, such allocation and spreading
shall be  effected  in such a manner  that the rate of  interest  so computed is
uniform throughout the stated term of the Note.

      15.   Commercial Purpose.  Borrower represents that the Indebtedness is
being  incurred by Borrower solely for the purpose of carrying on a business
or commercial enterprise, and not for personal, family, household, or
agricultural purposes.

      16.   Counting of Days.  Except where otherwise specifically provided,
any reference in this Note to a period of "days" means calendar days, not
Business Days.

      17.   Governing Law.  This Note shall be governed by the law of the
jurisdiction in which the Land is located.

      18.   Captions.  The captions of the paragraphs of this Note are for
convenience only and shall be disregarded in construing this Note.

      19.  Notices;  Written  Modifications.  All  notices,  demands  and  other
communications  required or permitted to be given by Lender to Borrower pursuant
to this  Note  shall be given in  accordance  with  Section  31 of the  Security
Instrument.  Any  modification  or amendment  to this Note shall be  ineffective
unless  in  writing  signed  by  the  party  sought  to  be  charged  with  such
modification or amendment;  provided,  however,  that in the event of a Transfer
under  the  terms  of  the  Security  Instrument,  any  or  some  or  all of the
Modification  to Multifamily  Note may be modified or rendered void by Lender at
Lender's option by notice to Borrower/transferee.

      20.  Consent  to  Jurisdiction   and  Venue.   Borrower  agrees  that  any
controversy  arising  under or in  relation  to this  Note  shall  be  litigated
exclusively  in the  jurisdiction  in which the Land is located  (the  "Property
Jurisdiction").  The state and federal courts and authorities with  jurisdiction
in  the  Property  Jurisdiction  shall  have  exclusive  jurisdiction  over  all
controversies  which shall  arise  under or in  relation to this Note.  Borrower
irrevocably consents to service,  jurisdiction, and venue of such courts for any
such  litigation  and waives any other  venue to which it might be  entitled  by
virtue of domicile, habitual residence or otherwise.

      21.  WAIVER OF TRIAL BY JURY.  BORROWER  AND LENDER EACH (A) AGREES NOT TO
ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE  ARISING OUT OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT
BY A JURY AND (B) WAIVES  ANY RIGHT TO TRIAL BY JURY WITH  RESPECT TO SUCH ISSUE
TO THE EXTENT THAT ANY SUCH RIGHT  EXISTS NOW OR IN THE  FUTURE.  THIS WAIVER OF
RIGHT  TO  TRIAL  BY JURY IS  SEPARATELY  GIVEN  BY EACH  PARTY,  KNOWINGLY  AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.


      ATTACHED EXHBIT.  The following Exhibit is attached to this Note:

      |  X  |       Exhibit A       Modifications to Multifamily Note

      IN WITNESS WHEREOF, Borrower has signed and delivered this Note under seal
or has  caused  this  Note to be signed  and  delivered  under  seal by its duly
authorized representative. Borrower intends that this Note shall be deemed to be
signed and delivered as a sealed instrument.


                              BORROWER:


                              QUAIL RUN IV LIMITED PARTNERSHIP,
                                    a South Carolina limited partnership

                                    By:   Shelter IV GP Limited Partnership,
                                          a South Carolina limited partnership,
                                          its General Partner

                                          By:   Shelter Realty IV Corporation,
                                                a South Carolina corporation,
                                                its General Partner



                                          By:_________________________________
                                                Patti K. Fielding,
                                                Senior Vice President

                                                57-0952893
                                                Borrower's Employer ID Number



<PAGE>



PAY TO THE ORDER OF FREDDIE MAC WITHOUT RECOURSE, THIS            DAY
OF                   2002.


                  KEYCORP REAL ESTATE CAPITAL MARKETS,
                  INC. an Ohio corporation




                                       By:
                                          Jeffrey S. Juster, Senior Vice
                                          President



Quail Run Apartments
Commitment No.:


<PAGE>
                                  Exhibit A

                      Modifications to Multifamily Note


1.    The first sentence of Paragraph 8 of the Note  ("Default  Rate") is hereby
      deleted and replaced with the following:

            So long as (a) any monthly  installment under this Note remains past
            due for more than thirty (30) days or (b) any other Event of Default
            has  occurred  and is  continuing,  interest  under  this Note shall
            accrue on the unpaid  principal  balance from the earlier of the due
            date of the first unpaid  monthly  installment  or the occurrence of
            such other Event of Default, as applicable,  at a rate (the "Default
            Rate")  equal to the lesser of (1) the maximum  interest  rate which
            may be  collected  from  Borrower  under  applicable  law or (2) the
            greater of (i) three  percent (3%) above the  Interest  Rate or (ii)
            four percent  (4.0%) above the  then-prevailing  Prime Rate. As used
            herein,  the term  "Prime  Rate"  shall  mean  the rate of  interest
            announced by The Wall Street Journal from time to time as the "Prime
            Rate".

2.   Paragraph 9(c) of the Note is amended to add the following subparagraph(4):

(4)            failure  by  Borrower  to pay the  amount  of the water and sewer
               charges, Taxes, fire, hazard or other insurance premiums,  ground
               rents,  assessments or other charges in accordance with the terms
               of the Security Instrument.

3.    Paragraph 19 is modified by deleting:  "; provided,  however,  that in the
      event of a Transfer  under the terms of the  Security  Instrument,  any or
      some or all of the  Modifications  to Multifamily  Note may be modified or
      rendered   void   by   Lender   at   Lender's    option   by   notice   to
      Borrower/transferee" in the last sentence of the Paragraph;  and by adding
      the following new sentence:

            The  Modifications  to Multifamily  Note set forth in this Exhibit A
            shall be null and void  unless  title to the  Mortgaged  Property is
            vested in an entity whose  Controlling  Interest(s)  are directly or
            indirectly  held by AIMCO  REIT or AIMCO OP. The  capitalized  terms
            used in this paragraph are defined in the Security Instrument.

<PAGE>

                                  Exhibit B

                     Modifications to Security Instrument

The following modifications are made to the text of the Instrument that precedes
this Exhibit:

A.    Section 1(i) is changed to read as follows:

                  (i) "Hazardous  Materials Laws" means all federal,  state, and
            local laws, ordinances, rules, regulations,  administrative rulings,
            court judgments, and decrees, and all mandatory standards,  policies
            and other governmental  requirements in effect now or in the future,
            including  all  amendments,  that relate to Hazardous  Materials and
            apply to Borrower or to the Mortgaged Property.  Hazardous Materials
            Laws   include,   but  are  not   limited   to,  the   Comprehensive
            Environmental  Response  Compensation  and Liability  Act, 42 U.S.C.
            Section 9601, et seq., the Resource  Conservation  and Recovery Act,
            42 U.S.C. Section 6901, et seq., the Toxic Substance Control Act, 15
            U.S.C. Section 2601, et seq., the Clean Water Act, 33 U.S.C. Section
            1251, et seq., and the Hazardous  Materials  Transportation  Act, 49
            U.S.C. Section 5101, and their state analogs.

B.    Section 1(v) is modified to read as follows:

                  (v) "Personalty" means all furniture, furnishings,  equipment,
            machinery,  building materials,  appliances, goods, supplies, tools,
            books,  records  (whether in written or electronic  form),  computer
            equipment  (hardware  and  software)  and  other  tangible  personal
            property  (other than Fixtures)  which are used now or in the future
            exclusively  in  connection   with  the  ownership,   management  or
            operation of the Land or the Improvements or are located on the Land
            or in the Improvements, and any operating agreements relating to the
            Land or the Improvements,  and any surveys, plans and specifications
            and  contracts  for  architectural,   engineering  and  construction
            services  relating  to the Land or the  Improvements  and all  other
            intangible property and rights exclusively relating to the operation
            of,  or  used  exclusively  in  connection  with,  the  Land  or the
            Improvements  including  all  governmental  permits  relating to any
            activities on the Land.

C.    The second and third  sentences  of  Section 2 are  modified  to read as
      follows:

            Borrower shall execute and deliver to Lender, upon Lender's request,
            financing  statements,  continuation  statements and amendments,  in
            such form as Lender  reasonably  may  require to perfect or continue
            the  perfection of this security  interest.  Borrower  shall pay all
            filing costs and all costs and  expenses of any record  searches for
            financing statements that Lender reasonably may require.

D.    Section 4(b) is changed to read as follows:

                  (b) Until Lender gives notice to Borrower of Lender's exercise
            of its rights under this Section 4, Borrower  shall have all rights,
            power and authority  granted to Borrower  under any Lease (except as
            otherwise  limited by this  Section or any other  provision  of this
            Instrument),  including the right, power and authority to modify the
            terms of any  Lease or  extend  or  terminate  any  Lease.  Upon the
            occurrence and during the  continuance  of an Event of Default,  the
            permission given to Borrower  pursuant to the preceding  sentence to
            exercise  all  rights,   power  and  authority  under  Leases  shall
            automatically  terminate.  Borrower  shall  comply  with and observe
            Borrower's  obligations  under  all  Leases,   including  Borrower's
            obligations  pertaining to the maintenance and disposition of tenant
            security deposits.

E.    Section 7(c) is modified to read as follows:

                  (c)  Notwithstanding  the  provisions of Section 7(a),  Lender
            will not require Borrower to deposit with Lender amounts  sufficient
            to  accumulate  with Lender the entire sum required to pay the water
            and sewer charges,  Taxes, fire, hazard or other insurance premiums,
            and ground rents.  At least  annually,  Borrower must provide Lender
            with proof of payment of all such  Impositions  for which  Lender is
            not collecting  Imposition Deposits. In the event that Borrower does
            not timely pay any of the  Impositions,  or fails to provide  Lender
            with proof of such  payment,  or upon the  occurrence of an Event of
            Default  hereunder,  or upon  Borrower's  failure  to  maintain  the
            Mortgaged  Property in a satisfactory  manner in accordance with the
            requirements of this Instrument, then in any such events, Lender may
            require  Borrower to deposit with Lender the Imposition  Deposits as
            provided in Section 7(a).

F. Except in a case where Lender in its discretion  determines that an emergency
   exists, Lender may take actions specified in Section 12(a) only if Lender has
   notified  Borrower of  Borrower's  failure to perform any of its  obligations
   under this  Instrument  or any other Loan Document and Borrower does not cure
   the failure within 10 days after such notice. If Lender so determines that an
   emergency exists, Lender shall notify Borrower of the action taken within ten
   days after the action is taken.


<PAGE>



G.    Sections 14(b)(4) and 14(b)(5) are modified to read as follows:

            (4)   within 120 days after the end of each fiscal year of Borrower,
                  and at any other time upon Lender's request,  a statement that
                  identifies  all owners of any  interest in  Borrower  and each
                  general partner in Borrower, and confirming that the ownership
                  of each other  Controlling  Entity has not changed in a manner
                  that violates Section 21(a);

            (5)   promptly  following  Lender's  request,  quarterly  income and
                  expense  statements  for the Property  relating to a quarterly
                  period ending no later than 45 days before the request;

H.    For purposes of Section 14(b),  Borrower shall be deemed to have delivered
      any  statement  or  document  "upon  Lender's  request"  if  Borrower  has
      delivered the document promptly following Lender's request.

I.    Notwithstanding   Section  (14)(c),  unless  an  Event  of  Default  has
      occurred  and is  continuing,  Lender  may  require  that the  financial
      statements  required  by Sections  14(b)(1),  14(b)(2)  and  14(b)(3) be
      audited,  but  may not  require  that  any  other  financial  statements
      required by Section 14 be audited.  Certification  of a statement by the
      chief  financial  officer  of the  entity  that  is the  subject  of the
      statement or, in the case of a partnership,  the chief financial officer
      of the general  partner,  will be acceptable to Lender as  certification
      by an individual having authority to bind Borrower.

J.    Lender shall not have  Borrower's  books and records  audited  pursuant to
      Section  14(d) unless  Lender has given  Borrower  notice  specifying  the
      statements,  schedules and reports required by Section 14(b) that Borrower
      has failed to provide,  and Borrower has not provided  such  statements by
      the expiration of ten days after such notice.

K.    So  long  as  Borrower  is  contesting  the  amount  and  validity  of any
      Imposition other than insurance  premiums  diligently and in good faith as
      described in Section 15(d) and all of the conditions  specified in clauses
      (1) through (4) of Section 15(d) are  satisfied,  Lender will refrain from
      applying Imposition Deposits to payment of the contested Imposition.

L.    Section 15(e) and Section 16 are modified to read as follows:

            15(e)  Borrower  shall  promptly  deliver  to  Lender  a copy of all
            notices of, and invoices for  Impositions,  and if Borrower pays any
            Imposition  directly  (which Borrower has no obligation to do unless
            Imposition   Deposits  are  insufficient  and  Lender  has  notified
            Borrower of that insufficiency),  Borrower shall promptly furnish to
            Lender receipts evidencing such payments.

            16. LIENS;  ENCUMBRANCES.  Borrower acknowledges that, to the extent
            provided in Section  21, the grant,  creation  or  existence  of any
            mortgage,  deed of trust, deed to secure debt,  security interest or
            other  lien or  encumbrance  (a "Lien")  on the  Mortgaged  Property
            (other  than  (i)  the  lien  of  this  Instrument,   and  (ii)  the
            Subordinate  Debt defined in Section HH of Exhibit B), or on certain
            ownership interests in Borrower,  whether voluntary,  involuntary or
            by operation of law, and whether or not such lien has priority  over
            the lien of this Instrument,  is a "Transfer"  which  constitutes an
            Event of Default and subjects  Borrower to personal  liability under
            the Note.

M.    For purposes of Section 18(b), "pre-packaged supplies,  cleaning materials
      and petroleum  products  customarily used in the operation and maintenance
      of comparable multifamily  properties" shall include,  without limitation,
      pool, spa, maintenance and gardening materials.

N.    The second sentence of Section 18(c) is modified to read as follows:

            Borrower  shall not lease or allow the sublease or use of all or any
            portion of the  Mortgaged  Property to any tenant or  subtenant  for
            nonresidential  use by any user that, in the ordinary  course of its
            business,  would be  reasonably  expected  to cause  or  permit  any
            Prohibited Activity or Condition.

O.    For  purposes of Section  18(d),  Borrower  shall only be obligated to pay
      out-of-pocket   expenses   incurred  by  Lender  in  connection  with  the
      monitoring and review of an O&M Program and Borrower's  performance to the
      extent such expenses are reasonable.

P.    Borrower's  representation  and  warranty  in Section  18(e)(4)  regarding
      requirements for notification  regarding  releases of Hazardous  Materials
      shall relate only to such releases, if any, at the Mortgaged Property.

Q.    Section 18(e)(5) is modified to read as follows:

            (5)   no event has occurred with respect to the  Mortgaged  Property
                  that constitutes, or with the passing of time or the giving of
                  notice   would   reasonably   be   expected   to   constitute,
                  noncompliance with the terms of any Environmental Permit;

R.    Section 18(g) is modified to read as follows:

                  (g) Borrower shall pay promptly the costs of any environmental
            inspections,  tests or audits ("Environmental Inspections") required
            by Lender in connection  with or in preparation  for any foreclosure
            or deed in lieu of foreclosure. Borrower shall also pay promptly the
            reasonable costs of any Environmental Inspections required by Lender
            in  connection  with,  or as a condition of Lender's  consent to any
            Transfer  under  Section  21,  or  required  by Lender  following  a
            reasonable  determination  by Lender that  Prohibited  Activities or
            Conditions may exist.  Any such costs incurred by Lender  (including
            the  fees  and  out-of-pocket   costs  of  attorneys  and  technical
            consultants  whether  incurred in  connection  with any  judicial or
            administrative  process or otherwise)  which  Borrower  fails to pay
            promptly  shall become an  additional  part of the  Indebtedness  as
            provided in Section 12. The results of all Environmental Inspections
            made  by  Lender  in  connection  with  or in  preparation  for  any
            foreclosure or deed in lieu of foreclosure shall at all times remain
            the  property  of Lender and  Lender  shall  have no  obligation  to
            disclose such results to or otherwise make such results available to
            Borrower or any other party.  Lender will make available to Borrower
            the results of all other  Environmental  Inspections made by Lender.
            Lender  hereby  reserves the right,  and Borrower  hereby  expressly
            authorizes  Lender,  to make  available to any party,  including any
            prospective bidder at a foreclosure sale of the Mortgaged  Property,
            the  results of any  Environmental  Inspections  made by Lender with
            respect  to the  Mortgaged  Property.  Borrower  consents  to Lender
            notifying  any  party  (either  as  part  of a  notice  of  sale  or
            otherwise)   of  the  results  of  any  of  Lender's   Environmental
            Inspections.  Except  in the  case  of an  Environmental  Inspection
            performed  in  connection  with a  foreclosure  or  deed  in lieu of
            foreclosure,  or a disclosure of  Environmental  Inspection  results
            that Lender is required by law to make, Lender shall notify Borrower
            of its  intention  to  disclose  such  information  and  shall  give
            Borrower ten days to provide supplemental information,  explanations
            or corrections to accompany the  disclosure.  Borrower  acknowledges
            that Lender cannot control or otherwise  assure the  truthfulness or
            accuracy of the results of any of its Environmental  Inspections and
            that  the  release  of such  results  to  prospective  bidders  at a
            foreclosure  sale of the Mortgaged  Property may have a material and
            adverse  effect upon the amount  which a party may bid at such sale.
            Borrower agrees that Lender shall have no liability  whatsoever as a
            result  of  delivering  the  results  of any  of  its  Environmental
            Inspections  to any third party,  and Borrower  hereby  releases and
            forever  discharges  Lender  from any and all  claims,  damages,  or
            causes of action,  arising,  out of, connected with or incidental to
            the  results  of,  the  delivery  of any of  Lender's  Environmental
            Inspections.

S.    Lender  shall not  commence  Remedial  Work under the second  sentence  of
      Section 18(h) unless Lender has given Borrower  notice of its intention to
      do so and Borrower has not begun  performing  the Remedial  Work within 10
      days after such notice.

T.    The following sentence is added at the end of Section 18(j):

            However,  Borrower  shall have no obligation to indemnify any of the
            foregoing  parties  to the  extent  that  the  proceedings,  claims,
            damages,  penalties  or costs arise out of the gross  negligence  or
            willful misconduct of Lender, any prior owner or holder of the Note,
            the Loan Servicer or any prior Loan Servicer.

U.    For purposes of Section 19(b),  Lender will accept a duplicate  original
      of any insurance policy.

V.    For purposes of Section 19(d), an insurance  company will be acceptable to
      Lender if it has a rating in Best's Key Rating  Guide of at least "A-" and
      a financial size category of at least "v".

W.    Clause (2) of Section 19(g) is modified to read as follows:

(2)               Lender determines, in its discretion,  that the combination of
                  insurance  proceeds and amounts  provided by the Borrower will
                  be sufficient to complete the Restoration.

X.    For  purposes of Section  19(h),  Lender  shall  automatically  succeed to
      rights of Borrower in and to insurance policies and unearned premiums only
      to  the  extent  permitted  by  the  applicable   policies  and  insurance
      companies.

Y.    Intentionally omitted.

Z.    Section 21(a)(2) is modified to read as follows:

            (2)   if  Borrower is a limited  partnership,  a Transfer of (A) any
                  general  partnership  interest  (except  for a  Transfer  to a
                  Qualified REIT Subsidiary,  as defined in Section 856(i)(2) of
                  the Internal Revenue Code of 1986, of Apartment Investment and
                  Management  Company, a Maryland  corporation),  or (B) limited
                  partnership interests in Borrower that would cause the Initial
                  Owners  of  Borrower  to own  less  than  51%  of all  limited
                  partnership interests in Borrower;

AA.   New Sections 21(b)(7),  21(b)(8),  21(b)(9), and 21(b)(10) are added, as
      follows:

            (7)   The Transfer of any limited or general  partnership  interests
                  in Borrower  provided no Change of Control  occurs as a result
                  of such Transfer.

            (8)   The Transfer of shares of common  stock,  limited  partnership
                  interests or other beneficial or ownership  interests or other
                  forms  of  securities  in  AIMCO  REIT or  AIMCO  OP,  and the
                  issuance of all  varieties  of  convertible  debt,  equity and
                  other  similar  securities  of AIMCO REIT or AIMCO OP, and the
                  subsequent  Transfer of such  securities;  provided,  however,
                  that no Change of Control occurs as a result of such Transfer,
                  either upon such Transfer or upon the subsequent conversion to
                  equity of such convertible debt or other securities.

            (9)   The  issuance by AIMCO REIT or AIMCO OP of  additional  common
                  stock,  limited  partnership  interests or other beneficial or
                  ownership  interests,   convertible  debt,  equity  and  other
                  similar  securities,  and  the  subsequent  Transfer  of  such
                  convertible  debt or securities;  provided,  however,  that no
                  Change  of  Control  occurs as the  result  of such  Transfer,
                  either upon such Transfer or upon the subsequent conversion to
                  equity of such convertible debt or other securities.

            (10)  So long as AIMCO  REIT owns 100% of the stock of
                  AIMCO-LP,    Inc.,   a   Transfer   of   limited
                  partnership  interests that results in AIMCO-LP,
                  Inc.  owning not less than 50.1% of the  limited
                  partnership interests in AIMCO OP.

BB.   Section  21(b)(8)  shall  apply only to a Transfer  of an  interest in a
      Controlling Entity that is prohibited by Section 21(a)(7).

CC.   A new Section 21(d) is added, as follows:

                  (d) For purposes of this Section 21, the following terms shall
            be defined as follows:

                  (1)   "Change of Control"  shall mean the earliest to occur of
                        (A)  the   date  an   Acquiring   Person   becomes   (by
                        acquisition,   consolidation,   merger  or   otherwise),
                        directly or  indirectly,  the  beneficial  owner of more
                        than  forty  percent  (40%) of the total  Voting  Equity
                        Capital of AIMCO REIT then outstanding,  or (B) the date
                        on  which  AIMCO  REIT  shall  cease  to  hold  (whether
                        directly   or   indirectly   through   a  wholly   owned
                        intermediary entity such as AIMCO-LP,  Inc. or AIMCO-GP,
                        Inc.)  at  least  50.1%  of  the   limited   partnership
                        interests  in AIMCO OP,  or (C) the date on which  AIMCO
                        REIT  shall  cease  for  any  reason  to  hold  (whether
                        directly  or  indirectly)   (i)  the  interests  in  the
                        Managing  General  Partner  held as of the  date of this
                        Instrument  (as evidenced by  organizational  charts and
                        documents  submitted to Lender as of such date) and (ii)
                        the Controlling  Interest(s) in the Borrower, or (D) the
                        replacement  (other than solely by reason of  retirement
                        at age sixty-five or older, death or disability) of more
                        than 50% (or such lesser  percentage  as is required for
                        decisionmaking by the board of directors of trustees, if
                        applicable) of the members of the board of directors (or
                        trustee,  if  applicable)  of AIMCO REIT over a one-year
                        period  where  such  replacement  shall  not  have  been
                        approved  by a vote of at least a majority  of the board
                        of directors (or trustees,  if applicable) of AIMCO REIT
                        then  still in office who  either  were  members of such
                        board of directors (or trustees,  if  applicable) at the
                        beginning  of such one year period or whose  election as
                        members  of the  board of  directors  (or  trustees,  if
                        applicable) was previously so approved.

                  (2)   "Acquiring  Person"  shall mean a  "person"  or group of
                        "persons" within the meaning of Sections 13(d) and 14(d)
                        of the  Securities  Exchange  Act of 1934,  as  amended.
                        However,   notwithstanding  the  foregoing,   "Acquiring
                        Person" shall not be deemed to include any member of the
                        Borrower Control Group unless such member has,  directly
                        or   indirectly,   disposed   of,   sold  or   otherwise
                        transferred to, or encumbered or restricted  (whether by
                        means of voting trust  agreement or  otherwise)  for the
                        benefit of an  Acquiring  Person,  all or any portion of
                        the Voting  Equity  Capital of AIMCO  REIT  directly  or
                        indirectly  owned or  controlled  by such member or such
                        member  directly or indirectly  votes all or any portion
                        of the Voting Equity Capital of AIMCO REIT,  directly or
                        indirectly,  owned or  controlled by such member for the
                        taking  of any  action  which,  directly  or  indirectly
                        constitutes  or would result in a Change of Control,  in
                        which event such member of the  Borrower  Control  Group
                        shall be deemed to constitute an Acquiring Person to the
                        extent of the Voting Equity  Capital of AIMCO REIT owned
                        or controlled by such member.

                  (3)   "Borrower  Control Group" shall mean Terry
                        Considine, Peter K. Kompaniez,  Richard S.
                        Ellwood,  J.  Landis  Martin,   Thomas  L.
                        Rhodes and James N. Bailey.

                  (4)   A "Person" shall mean an individual, an estate, a trust,
                        a  corporation,   a  partnership,  a  limited  liability
                        company  or any other  organization  or entity  (whether
                        governmental or private).

                  (5)   "Security"  shall  have the same  meaning  as in Section
                        2(1) of the Securities Act of 1933, as amended.

                  (6)   "Controlling Interest(s)" shall mean (i) with respect to
                        a partnership,  such majority  and/or  managing  general
                        partner  interests  which,  together  with a majority of
                        limited  partnership  interests if necessary for consent
                        purposes,  vest in the holder of such interests the sole
                        power,  right and  authority  to control  the day to day
                        operations   of   the   Borrower;   including,   without
                        limitation, the authority to manage, operate and finance
                        the   Mortgaged   Property,   (ii)  with  respect  to  a
                        corporation,  the  number of shares  which  entitle  the
                        holder to elect a majority of the board of  directors of
                        the  Borrower,  and  (iii)  with  respect  to a  limited
                        liability company,  such majority and/or managing member
                        interests  as vest in the holder of such  interests  the
                        sole power,  right and  authority  to control the day to
                        day  operations  of  the  Borrower;  including,  without
                        limitation, the authority to manage, operate and finance
                        the Mortgaged Property.

                  (7)   "AIMCO  REIT"  shall  mean   Apartment   Investment  and
                        Management Company, a corporation organized and existing
                        under the laws of the State of Maryland.

                  (8)   "AIMCO OP" shall  mean  AIMCO  Properties,
                        L.P., a limited partnership  organized and
                        existing  under  the laws of the  State of
                        Delaware.

(9)                     "Managing   General   Partner"  shall  mean  the  entity
                        executing  this  Instrument  on behalf  of the  Borrower
                        and/or its successors or assigns in interest.

(10)                    "Voting  Equity  Capital"  shall mean  Securities of any
                        class or classes,  the holders of which are  ordinarily,
                        in the  absence of  contingencies,  entitled  to elect a
                        majority   of  the  board  of   directors   (or  Persons
                        performing similar functions).

DD.   Section 21(e) is hereby added as follows:

                  (e) Lender  shall  consent to a one-time  substitution  of the
            Mortgaged Property for another multifamily apartment rental property
            (the "Substitution"), which shall not result in an adjustment to the
            rate at which the  Indebtedness  secured  by this  Instrument  bears
            interest  provided that Borrower has satisfied each of the following
            requirements:

            (1)   there  shall  exist no Event of  Default  uncured  within  any
                  applicable grace period.

            (2)   the  loan to  value  ratio  with  respect  to the  substituted
                  property  (the  "Substituted  Property")  at the  time  of the
                  proposed  Substitution  is not greater  than the lesser of (1)
                  the loan to value ratio of the Mortgaged Property which exists
                  as of the date  hereof,  or (2) the then current loan to value
                  ratio  of the  Mortgaged  Property  at the  time  of any  such
                  Substitution  based  on  an  MAI  appraisal  (prepared  by  an
                  appraiser  acceptable  to Lender and paid for by  Borrower) at
                  the time of any such Substitution.  (As used herein,  "loan to
                  value ratio" means the ratio of (A) the outstanding  principal
                  balance  of  the   Indebtedness   to  (B)  the  value  of  the
                  Substituted   Property   as   determined   by  Lender  in  its
                  discretion, expressed as a percentage);

            (3)   the  debt   service   coverage   ratio  with  respect  to  the
                  Substituted Property for the last twelve full months preceding
                  the proposed  Substitution is not less than the greater of (1)
                  the debt service  coverage  ratio for the  Mortgaged  Property
                  which  exists as of the date  hereof,  or (2) the then current
                  debt service coverage ratio for the Mortgaged  Property at the
                  time of any such Substitution. (As used herein, the term "debt
                  service  coverage ratio" means the ratio of (A) the annual net
                  operating  income from the Substituted  Property's  operations
                  during the  preceding  twelve  month period which is available
                  for  repayment  of  debt,   after  deducting   reasonable  and
                  customary operating expenses,  to (B) the annual principal and
                  interest payable under the Note);

            (4)   any such  Substitution  shall be approved  only  following the
                  date which is ten years from the date of this Instrument;

            (5)   Lender  shall have  received  an  environmental  report on the
                  Substituted  Property  showing that no Phase II  environmental
                  report is required;

            (6)   Lender  shall  have  received  an  engineering  report  on the
                  Substituted  Property showing that there are at least ten (10)
                  years of useful life remaining with respect to the Substituted
                  Property;

            (7)   Lender   shall   have   received   the   amount  of   Lender's
                  out-of-pocket costs (including, without limitation, reasonable
                  attorneys'   fees  and  the  costs  of  engineering   reports,
                  appraisals and  environmental  reports)  incurred in reviewing
                  the Substitution request and implementing the Substitution;

            (8)   Lender shall have received a new currently  dated  mortgagee's
                  title  insurance   policy  in  the  form  and  containing  the
                  exceptions acceptable to Lender according to its standards for
                  title  insurance   policies  in  place  at  the  time  of  the
                  Substitution, insuring the mortgage secured by the Substituted
                  Property;

            (9)   Lender  shall have  received a currently  dated  survey of the
                  Substituted Property,  acceptable to Lender in accordance with
                  its  standards  and  requirements  for surveys in place at the
                  time of the substitution;

            (10)  The  physical  condition,  location  and other  aspects of the
                  Substituted Property shall be substantially  comparable to the
                  Mortgaged  Property as determined by Lender in its  reasonable
                  discretion;

            (11)  If the  Substitution  is  approved,  (i)  Borrower  shall have
                  executed and delivered to Lender for  recordation an amendment
                  to this Instrument in form and substance  acceptable to Lender
                  in its discretion,  substituting the Substituted  Property for
                  the Mortgaged Property;  and (ii) Borrower shall have executed
                  and delivered such additional documentation, including without
                  limitation new Uniform  Commercial Code Financing  Statements,
                  as Lender may  reasonably  require to grant Lender a perfected
                  first lien and security  interest in the Substituted  Property
                  and to otherwise implement the Substitution in accordance with
                  this Section.

EE.   Section 22(a) is modified to read as follows:

      (a) any failure by Borrower to pay or deposit (i) any payment of principal
      or interest or any  Imposition  Deposit within three days after it is due,
      or (ii) any other amount  required by the Note,  this  Instrument,  or any
      other Loan Document when due.

FF.   Section  28  shall  obligate  Borrower  to  provide  only  such  further
      assurances as Lender reasonably may require.

GG.   The words "Except as otherwise disclosed to Lender in writing,  before the
      date of this Instrument" are added at the beginning of the second sentence
      of Section 41.

HH.   Section 48 Subordinate Debt is added as follows:

                  48   SUBORDINATE   DEBT.   Borrower   may  incur
            indebtedness  other  than  the  Indebtedness  provided
            each  of  the  following   terms  and  conditions  are
            satisfied:

                  (a)  any  such  indebtedness  ("Subordinate  Debt")  shall  be
            incurred by Borrower  solely for or in respect of the  operation  of
            the  Mortgaged  Property  in the  ordinary  course of  business as a
            residential apartment rental project. Such Subordinate Debt shall be
            and  remain  payable  to,  held by,  and in favor of only an  "AIMCO
            Subordinate Lender", which shall be defined as: AIMCO REIT, AIMCO OP
            or any  entity  in which  AIMCO  REIT or AIMCO OP holds  Controlling
            Interest(s),  whether directly or indirectly, and which entity shall
            have a term of existence  not  expiring  prior to 10 years after the
            maturity date of the Note;

                  (b) except (1) as set forth in Subsection  (c), or (2) for any
            debt  secured  by  an  ownership  interest  in  Borrower,  any  such
            Subordinate Debt shall be unsecured, and shall not be evidenced by a
            note or any like instrument;

                  (c) any  Subordinate  Debt may be  evidenced  by a note and/or
            secured by a lien on the Mortgaged  Property and/or the other assets
            of Borrower provided that:

                  (1)   the total debt  service  coverage  ratio with respect to
                        the Mortgaged  Property  after the proposed  Subordinate
                        Debt  is  incurred   and/or  secured  by  the  Mortgaged
                        Property  will  equal  at least a ratio  of  1.10:1,  as
                        determined by Lender in its reasonable  discretion.  (As
                        used  herein,  the term  "total  debt  service  coverage
                        ratio"  means the ratio of (A) the annual net  operating
                        income from the Mortgaged  Property during the preceding
                        12 month  period  which is  available  for  repayment of
                        debt, after deducting reasonable and customary operating
                        expenses,  to (B) the  aggregate  annual  principal  and
                        interest   payable   under   the  Note,   the   proposed
                        Subordinate Debt and any other then existing Subordinate
                        Debt encumbering the Mortgaged Property);

                  (2)   the principal amount of such Subordinate Debt,  together
                        with the  Indebtedness  and all other  Subordinate  Debt
                        then  encumbering  the  Mortgaged  Property,  shall  not
                        exceed 85% of the value of the Mortgaged Property at the
                        time the Borrower incurs the proposed  Subordinate Debt,
                        as determined by Lender, in Lender's sole discretion;

                  (3)   any note and security instrument  evidencing or securing
                        such   Subordinate  Debt  (A)  shall  by  its  terms  be
                        expressly  subordinate  to the  Indebtedness  and to all
                        amendments,  extensions and renewals thereof;  (B) shall
                        provide  that  the  AIMCO   Subordinate   Lender  cannot
                        exercise  its   remedies   for  a  default   under  such
                        Subordinate  Debt without the prior  written  consent of
                        the  Lender;  (C)  shall  provide  that,  so long as the
                        Indebtedness is outstanding, all payments under any such
                        note and/or  security  therefor shall accrue if the same
                        are unpaid;  (D) shall  provide that  payments  shall be
                        made  in the  following  order:  (i)  amounts  due  with
                        respect  to  the  operation  and   maintenance   of  the
                        Mortgaged Property,  including,  without limitation, all
                        monthly  installments  of principal  and interest on the
                        Indebtedness and any other operating  expenses,  capital
                        expenses and tax and  insurance  payments,  (ii) amounts
                        due  with  respect  to any  Subordinate  Debt  which  is
                        secured by a lien on the Mortgaged  Property,  and (iii)
                        amounts  due with  respect to any  Subordinate  Debt not
                        secured by a lien on the Mortgaged  Property;  (E) shall
                        provide that the AIMCO Subordinate  Lender shall provide
                        Lender with notice of any default under the  Subordinate
                        Debt not cured within any applicable grace period at the
                        same time it provides such notice to the  Borrower;  and
                        (F) shall  prominently state that the instrument and the
                        Subordinate   Debt  are  not   assignable  or  otherwise
                        transferable except to another AIMCO Subordinate Lender;

                  (4)   Borrower delivers to Lender evidence in writing that the
                        Subordinate Debt loan documents,  the total debt service
                        coverage  ratio and the  aggregate  loan to value  ratio
                        limitations set forth herein comply in all respects with
                        the provisions of this Section; and

                  (5)   Borrower's   incurring  of  Subordinate   Debt  and,  if
                        applicable,  placement  of a  subordinate  lien  on  the
                        Mortgaged  Property securing such Subordinate Debt shall
                        not   constitute   an  Event  of   Default   under  this
                        instrument.

(d)   Borrower  and  the  AIMCO   Subordinate   Lender   shall   execute  such
                     instruments  and documents in connection with
                     the  status  of  such   Subordinate  Debt  as
                     Lender  shall  from  time to time  reasonably
                     request,  such  document to be in the form of
                     the subordination  agreement  attached hereto
                     as  Appendix 1.  Borrower  shall bear any and
                     all  expenses  necessary in  connection  with
                     its  compliance  with the  provisions of this
                     subsection    (d),     including,     without
                     limitation, reasonable attorneys' fees.

II.   Section 37 is modified by deleting:  "; provided,  however,  that in the
      event  of a  Transfer,  any or  some  or all  of  the  Modifications  to
      Instrument  set forth in Exhibit B (if any) may be  modified or rendered
      void by Lender  at  Lender's  option by notice to  Borrower/transferee".
      Except for Section JJ below and except for the  definitions of the terms
      used in Section JJ and not defined therein,  the modifications set forth
      in this Exhibit B shall be null and void unless  title to the  Mortgaged
      Property  is vested  in an  entity  whose  controlling  Interest(s)  are
      directly or indirectly held by AIMCO REIT or AIMCO OP.

JJ.   Section 49 AIMCO- Held Subordinate Debt is added as follows:

            49 AIMCO-HELD SUBORDINATE DEBT. In connection with a Transfer of the
            Mortgaged Property which has been consented to by Lender pursuant to
            Section  21(c),  and provided  that no Change of Control of Borrower
            has occurred prior to such Transfer,  the proposed  transferee  (the
            "New Borrower") may incur indebtedness,  other than the Indebtedness
            and such other  indebtedness as is permitted under the terms of this
            Instrument,  secured by a lien upon the Mortgaged Property, provided
            each of the following terms and conditions are satisfied:

                  (a) any  such  indebtedness  ("AIMCO-Held  Subordinate  Debt")
            shall be incurred by the New Borrower  solely in connection with its
            purchase of the Mortgaged Property;

                  (b) The AIMCO-Held Subordinate Debt (and any and all documents
            evidencing such Subordinate Debt) shall be and remain held by and in
            favor of an AIMCO Subordinate Lender;

                  (c)  on the  date  of  the  Transfer,  Lender  and  the  AIMCO
            Subordinate  Lender shall  execute and record  among the  applicable
            land  records  a   subordination   agreement  in  the  form  of  the
            subordination  agreement  attached  hereto  as  Appendix  1,  or  at
            Lender's  option  in  substantially  the  form of any  subordination
            agreement which may have been entered into by and between Lender (or
            predecessor to Lender's interest  hereunder) and any entity in which
            AIMCO  REIT or  AIMCO  OP  holds  Controlling  Interest(s),  whether
            directly or indirectly,  prior to the Transfer and whether or not in
            connection with the Mortgaged  Property,  with such modifications as
            Lender reasonably requires;  provided,  however,  that (i) the AIMCO
            Subordinate Lender shall have the right to further sell or otherwise
            transfer the AIMCO-Held  Subordinate Debt to AIMCO REIT, AIMCO OP or
            any  entity  in which  AIMCO  REIT or  AIMCO  OP  holds  Controlling
            Interest(s),  whether  directly  or  indirectly,  and (ii) the AIMCO
            Subordinate  Lender shall have the right,  without Lender's consent,
            to  accept  a  Transfer  of  title to the  Mortgaged  Property  from
            Borrower  by (A) deed in lieu of  foreclosure  or (B) a  foreclosure
            which  results  in AIMCO  Subordinate  Lender  or an entity in which
            AIMCO REIT or AIMCO OP hold  Controlling  Interest(s),  directly  or
            indirectly, holding title to the Mortgaged Property, in satisfaction
            of the  AIMCO-Held  Subordinate  Debt,  and such Transfer  shall not
            constitute  an  Event  of  Default  under  this  Instrument.   As  a
            prerequisite  to  foreclosure  in  satisfaction  of  the  AIMCO-Hold
            Subordinate Debt, AIMCO Subordinate Lender shall provide Lender with
            thirty (30) days prior written  notice of the  commencement  of such
            foreclosure.  Lender shall acknowledge its receipt of such notice in
            writing within ten (10) business days, and with such acknowledgement
            shall  provide an estimate of the  reasonable  fees and  expenses it
            expects  to  incur  in  connection  with  the   foreclosure.   AIMCO
            Subordinate  Lender shall deposit such  estimated sum in escrow with
            Lender or a representative  designated by Lender.  Promptly upon the
            conclusion of the foreclosure, any excess sums not expended shall be
            returned to AIMCO  Subordinate  Lender or AIMCO  Subordinate  Lender
            shall  pay to  Lender  the  amount  by  which  the  Lender's  actual
            reasonable expenditures exceed the deposited sum.

                  (d) the combined debt service  coverage  ratio with respect to
            the Mortgaged  Property  after the proposed  AIMCO-Held  Subordinate
            Debt  is  incurred  will  equal  at  least  a ratio  of  1.10:1,  as
            determined by Lender in its reasonable discretion (if the AIMCO-Held
            Subordinate Debt requires a balloon payment,  such payment cannot be
            due prior to the Maturity Date of the Note.); and Lender has advised
            the Borrower and New Borrower in writing of such determination prior
            to the Transfer;

                  (e) the principal amount of the AIMCO-Held  Subordinate  Debt,
            together with the Indebtedness  and all other  Subordinate Debt then
            encumbering  the  Mortgaged  Property,  shall not  exceed 85% of the
            value of the Mortgaged  Property at the time the Borrower incurs the
            proposed AIMCO-Held Subordinate Debt, as determined by Lender in its
            sole  discretion;  and  Lender  has  advised  the  Borrower  and New
            Borrower in writing of such determination prior to the Transfer;

                  (f) (i) not less than 40 days prior to the  Transfer,  the New
            Borrower must have submitted to Lender or, if Lender is then Freddie
            Mac, to a party designated by Freddie Mac (the "Designated Seller"),
            a complete  and  accurate  application,  together  with all required
            supporting  documentation  including a written term sheet specifying
            all of the terms of the proposed AIMCO-Held  Subordinate Debt, for a
            subordinate  mortgage loan in the  principal  amount of the proposed
            AIMCO-Held  Subordinate Debt (the "Subordinate  Loan");  and (ii) 10
            days prior to the  Transfer,  Lender or the  Designated  Seller must
            have failed to issue to the proposed transferee a written commitment
            to provide the  Subordinate  Loan at an interest rate and upon terms
            at least as  favorable to the  proposed  transferee  as those of the
            proposed  AIMCO-Held  Subordinate  Debt (and if such  commitment  is
            issued,  Lender or the Designated  Seller shall provide financing to
            the  New  Borrower  in  the  amount  of  the   proposed   AIMCO-Held
            Subordinate Loan); and

                  (g)  Borrower  has paid all costs  and  expenses  incurred  by
            Lender  in  connection   with  the  AIMCO-Held   Subordinate   Debt,
            including,  without  limitation,  a review  fee equal to 0.1% of the
            outstanding  principal balance of the Loan and reasonable attorneys'
            fees.

      Notwithstanding  anything in this Instrument  which may be deemed to be to
      the contrary, (i) AIMCO Subordinate Lender shall have the right to sell or
      otherwise transfer the AIMCO-Held Subordinate Debt to AIMCO REIT, AIMCO OP
      or  any  entity  in  which  AIMCO  REIT  or  AIMCO  OP  holds  Controlling
      Interest(s),  whether  directly  or  indirectly,  and (ii)  shall have the
      right,  without  Lender's  consent,  to accept a Transfer  of title to the
      Mortgaged  Property  from Borrower by  deed-in-lieu  of  foreclosure  or a
      foreclosure  which  results  in AIMCO  Subordinate  Lender or an entity in
      which  AIMCO REIT or AIMCO OP hold  Controlling  Interest(s),  directly or
      indirectly,  holding title to the Mortgaged Property, as more specifically
      set forth above.  Such Transfer  shall not  constitute an Event of Default
      under this  Instrument,  and this entire Exhibit B shall  automatically be
      reinstated in its entirety including and without  limitation,  Sections HH
      and JJ.


Part of 05/02 Aimco Template - Last revised 12/01

<PAGE>




                       APPENDIX 1 TO SECURITY INSTRUMENT

                   SUBORDINATION AND INTERCREDITOR AGREEMENT

THIS SUBORDINATION AND INTERCREDITOR  AGREEMENT ("Agreement") made as of the day
of , , by and between , a , having an office at (hereinafter  referred to as the
"Subordinate Mortgagee") and , a having an office at (hereinafter referred to as
the "Senior Mortgagee").

                                  WITNESSETH:

WHEREAS,  the Senior  Mortgagee is the owner and holder of that certain mortgage
described  on Exhibit A attached  hereto  (said  mortgage,  and any  extensions,
modifications,  substitutions  and  consolidations  thereof,  being  hereinafter
referred to as the "Senior  Mortgage"),  covering the estate of (the "Borrower")
in certain premises located in the County of and State of , as more particularly
described on Exhibit B attached hereto and made a part hereof, together with all
improvements located thereon (collectively,  the "Mortgaged Property"),  and the
note  secured  thereby  (said  note,  and  any  extensions,   modifications   or
substitutions  thereof,  being  hereinafter  referred to as the "Senior  Note"),
evidencing  and  securing,  a certain  loan made by the Senior  Mortgagee to the
Borrower (the "Senior Loan"); and

      WHEREAS,  the Borrower is about to execute and deliver to the  Subordinate
Mortgagee  (i)  a  note  (said  note,  and  any  extensions,   modifications  or
substitutions  thereof, being hereinafter referred to as the "Subordinate Note")
in the  principal  sum  of  Dollars  ($ );  (ii) a  subordinate  mortgage  (said
mortgage,  and any extensions,  modifications,  substitutions and consolidations
thereof,  being hereinafter referred to as the "Subordinate  Mortgage") securing
said  Subordinate  Note;  and (iii) a collateral  assignment of leases and rents
covering the Mortgaged  Property,  evidencing and securing a certain subordinate
loan to be made by the Subordinate  Mortgagee to the Borrower (the  "Subordinate
Loan"); and

      WHEREAS,   the   Subordinate   Mortgage   is  intended  to  be  recorded
immediately  prior to this  Agreement  in the  office of  ___________  County,
State of                          ; and

      WHEREAS,  the Senior  Mortgagee  is  unwilling  to allow the  Borrower  to
further encumber the Mortgaged Property with the Subordinate Mortgage unless the
Subordinate  Mortgage  is  subordinated  to the  Senior  Mortgage  in the manner
hereinafter set forth;

      NOW,  THEREFORE,  in consideration of the mutual promises contained herein
and other good and valuable consideration,  the receipt and sufficiency of which
is hereby acknowledged by the parties hereto, the Subordinate  Mortgagee and the
Senior Mortgagee hereby agree as follows:

            (1)  The  Subordinate  Mortgage,   any  other  document  evidencing,
securing or guaranteeing the indebtedness secured by the Subordinate Mortgage or
otherwise  executed in connection with the Subordinate  Mortgage  (collectively,
together  with any  extensions,  refinancing,  modifications,  substitutions  or
consolidations  thereof,  being  hereinafter  collectively  referred  to as  the
"Subordinate  Loan Documents") and all advances made thereunder are hereby,  and
shall continue to be, subject and subordinate in lien and in payment to the lien
and payment of the Senior Mortgage and any other document  evidencing,  securing
or guaranteeing,  the  indebtedness  secured by the Senior Mortgage or otherwise
executed in connection with the Senior Mortgage (collectively, together with any
extensions, refinancing, modifications, substitutions or consolidations thereof,
being hereinafter  collectively  referred to as the "Senior Loan Documents") and
all advances made thereunder without regard to the application of such advances,
together with all interest, prepayment premiums and all other sums due under the
Senior  Loan  Documents.  All of the  terms,  covenants  and  conditions  of the
Subordinate  Mortgage and the Subordinate  Loan Documents are hereby,  and shall
continue to be, subordinate to all of the terms, covenants and conditions of the
Senior  Mortgage  and the Senior Loan  Documents.  The  foregoing  shall  apply,
notwithstanding  the availability of other collateral to the Senior Mortgagee or
the  actual  date  and  time of  execution,  delivery,  recordation,  filing  or
perfection of the Senior  Mortgage or the Subordinate  Mortgage,  or the lien or
priority of payment thereof,  and  notwithstanding the fact that the Senior Loan
or any claim for the Senior  Loan is  subordinated,  avoided or  disallowed,  in
whole or in part,  under  Title 11 of the United  States  Code (the  "Bankruptcy
Code") or other  applicable  federal or state law. In the event of a proceeding,
whether voluntary or involuntary, for insolvency,  liquidation,  reorganization,
dissolution,  bankruptcy or other similar proceeding  pursuant to the Bankruptcy
Code or other applicable federal or state law, the Senior Loan shall include all
interest  accrued  on the  Senior  Loan,  in  accordance  with and at the  rates
specified in the Senior Loan Documents,  both for periods before and for periods
after the  commencement of any of such  proceedings,  even if the claim for such
interest is not allowed pursuant to applicable law.

            (2) In addition,  without  limiting the foregoing,  the  Subordinate
Mortgagee  agrees  that  all  rights  of the  Subordinate  Mortgagee  under  the
Subordinate  Mortgage  or under the  Subordinate  Loan  Documents  in and to the
Mortgaged Property and the proceeds thereof including  assignments of leases and
rents,  issues and profits and the rights with respect to insurance proceeds and
condemnation awards) shall be expressly subject and subordinate:

                  (a)  to  the  rights  of the  Senior  Mortgagee  in and to the
            Mortgaged Property and the proceeds thereof  (including  assignments
            of leases and rents,  issues and profits and rights with  respect to
            insurance  proceeds and condemnation  awards) on the terms set forth
            in the Senior Mortgage and the Senior Loan Documents; and

                  (b) to any and all advances made and other  expenses  incurred
            under,  and as permitted in, the Senior Mortgage and the Senior Loan
            Documents.

            (3) The Subordinate  Mortgagee  hereby  represents and warrants that
(a) it is now  the  owner  and  holder  of the  Subordinate  Mortgage;  (b)  the
Subordinate  Mortgage  is now in full  force  and  effect;  (c) the  Subordinate
Mortgage has not been modified or amended; (d) the Borrower is not in default in
the observance and/or performance of any of the obligations  thereunder required
to be observed and performed by the Borrower; (e) no event has occurred,  which,
with the  passing  of time or the giving of notice or both  would  constitute  a
default  thereunder;  (f) all  payments  due thereon to and  including  the date
hereof,  have been paid in full;  (g) the principal  balance of the  Subordinate
Mortgage  is as set forth on Exhibit C hereto;  (h)  interest  on the  principal
balance  shall be  calculated  at the annual  rate of  interest  as set forth on
Exhibit C hereto;  (i) no scheduled  monthly payments under the Subordinate Note
have been prepaid; and (j) any rights of the Subordinate Mortgagee in and to the
lien, estate or other interest in the Mortgaged  Property are not subject to the
rights of any third parties by way of subrogation, indemnification or otherwise.

            (4) The Subordinate  Mortgagee hereby agrees that so long as any sum
shall remain outstanding on the Senior Loan Documents:

                  (a) The Subordinate Mortgagee shall simultaneously send to the
            Senior  Mortgagee due notice of all defaults  under the  Subordinate
            Loan  Documents  as well as copies  of all  notices  required  to be
            delivered  to the Borrower  under the  Subordinate  Loan  Documents.
            Notice under the Subordinate  Mortgage shall not be deemed effective
            until such  notice has been  received by the Senior  Mortgagee.  The
            Senior  Mortgagee  shall  have the  right,  but  shall  not have any
            obligation whatsoever, to cure any such default within ten (10) days
            after the expiration of the applicable grace period permitted to the
            Borrower under the Subordinate Loan Documents.

                  (b) The  Subordinate  Mortgagee  shall not,  without the prior
            written consent of the Senior Mortgagee take any Enforcement  Action
            (hereinafter defined). For the purposes of this Agreement,  the term
            "Enforcement Action" shall mean with respect to the Subordinate Loan
            Documents,  the  acceleration of all or any part of the indebtedness
            secured  by  the  Subordinate   Loan   Documents,   any  foreclosure
            proceedings,  the exercise of any power of sale,  the  acceptance by
            the holder of the  Subordinate  Mortgage of a deed or  assignment in
            lieu of  foreclosure,  the  obtaining of a receiver,  the seeking of
            default  interest,  the  taking  of  possession  or  control  of the
            Mortgaged  Property,  the  suing  on  the  Subordinate  Note  or any
            guaranty  or other  obligation  contained  in the  Subordinate  Loan
            Documents,  the exercising of any banker's lien or rights of set-off
            or recoupment, the commencement of any bankruptcy, reorganization or
            insolvency  proceedings  against the Mortgagor  under any federal or
            state law, or the taking of any other enforcement action against the
            Mortgaged Property;

                  (c) In  the  event  (i)  the  Senior  Loan  becomes  due or is
            declared  due and  payable  prior to its stated  maturity,  (ii) the
            Subordinate  Mortgagee  receives  any  prepayment  of  principal  or
            interest,  in part  or in  whole,  under  the  Subordinate  Mortgage
            contrary  to the  terms of the  Subordinate  Loan  Documents,  (iii)
            Borrower is in default under the Senior Loan Documents,  or (iv) any
            payment, distribution, division or application, partial or complete,
            voluntary or involuntary, by operation of law or otherwise, by or on
            behalf of Borrower, or of all or any part of the property, assets or
            business of the Borrower or the proceeds thereof,  in whatever form,
            is made to any  creditor  or  creditors  of the  Borrower  or to any
            holder of indebtedness of the Borrower by reason of or in connection
            with  any  liquidation,  dissolution  or  other  winding  up of  the
            Borrower or its business,  or any receivership or custodianship  for
            the Borrower of all or  substantially  all of its  property,  or any
            insolvency or bankruptcy proceedings or composition or restructuring
            of any debts of Borrower or assignment  for the benefit of creditors
            or any  proceeding  by or against the  Borrower for any relief under
            any bankruptcy, reorganization or insolvency law or laws, federal or
            state,  or any law,  federal  or state,  relating  to the  relief of
            debtors, readjustment of indebtedness,  reorganization,  composition
            or  extension,   then,  and  in  any  such  event,  any  payment  or
            distribution of any kind or character,  whether in cash, property or
            securities which shall be payable or deliverable with respect to any
            or all of the Subordinate  Loan shall be paid forthwith or delivered
            directly to the Senior  Mortgagee for  application to the payment of
            the Senior Loan to the extent  necessary  to make payment in full of
            all sums due under the Senior Loan  remaining  unpaid  after  giving
            effect to any  concurrent  payment  or  distribution  to the  Senior
            Mortgagee or, received by the Subordinate  Mortgagee,  shall be held
            in trust by the Subordinate Mortgagee, for the benefit of the Senior
            Mortgagee.  In any such event,  the Senior  Mortgagee may, but shall
            not be obligated to,  demand,  claim and collect any such payment or
            distribution that would, but for these subordination  provisions, be
            payable  or  deliverable  with  respect  to  the  Subordinate  Loan.
            Subordinate   Mortgagee   hereby  grants  to  Senior   Mortgagee  an
            irrevocable  power of  attorney  coupled  with an  interest  for the
            purpose of exercising  any and all rights and remedies  available to
            Senior  Mortgagee  pursuant to this Paragraph  4(c). In the event of
            the occurrence of (i), (ii) or (iii) above and until the Senior Loan
            shall have been fully paid and satisfied and all of the  obligations
            of the Borrower to the Senior Mortgagee have been performed in full,
            no payment shall be made to or accepted by the Subordinate Mortgagee
            in respect of the Subordinate Loan;

                  (d) No tenant under any lease of any portion of the  Mortgaged
            Property will be made a party  defendant in any  foreclosure  of the
            Subordinate  Mortgage nor will any  Enforcement  Action or any other
            action be taken that would terminate any leases or other rights held
            by or granted to or by third  parties with respect to the  Mortgaged
            Property;

                  (e) (i) If, after the consent  required  under  paragraph 4(b)
            above has been obtained,  any action or proceeding  shall be brought
            to  foreclose  the  Subordinate   Mortgage  or  commence  any  other
            Enforcement  Action, no portion of the rents,  issues and profits of
            the Mortgaged  Property shall be collected except through a receiver
            appointed  by  the  court  in  which  such  foreclosure   action  or
            proceeding is brought,  after due notice of the  application for the
            appointment  of such  receiver  shall  have been given to the Senior
            Mortgagee  and the rents,  issues and profits so  collected  by such
            receiver  shall be applied  first to the payment of  maintenance  of
            taxes  and  insurance  on the  Mortgaged  Property,  and then to the
            payment  of  principal  and  interest  due and  owing on the  Senior
            Mortgage prior to the payment,  if any, of any principal or interest
            due and  owing  on the  Subordinate  Mortgage;  (ii) if  during  the
            pendency of any such foreclosure action or proceeding,  an action or
            proceeding  shall  be  brought  by  the  Senior  Mortgagee  for  the
            foreclosure of the Senior Mortgage and an application is made by the
            Senior  Mortgagee  for an  extension  of such  receivership  for the
            benefit of the Senior Mortgagee,  all such rents, issues and profits
            held by such  receiver as of the date of such  application  shall be
            applied  by the  receiver  solely  for  the  benefit  of the  Senior
            Mortgagee,  and the  Subordinate  Mortgagee shall not be entitled to
            any  portion  thereof  until all sums due and owing  pursuant to the
            Senior  Mortgage  have been paid in full and  applied as  aforesaid;
            (iii)  notice  of  the   announcement  of  any  foreclosure  of  the
            Subordinate Mortgage shall be given to the Senior Mortgagee and true
            copies of all notices  thereof and papers  served or entered in such
            action shall be delivered to the Senior Mortgagee;

                  (f) In the event the Senior  Mortgagee shall release,  for the
            purposes of restoration of all or any part of the improvements on or
            within the Mortgaged Property,  its right, title and interest in and
            to the  proceeds  under  policies of insurance  thereon,  and/or its
            right,  title and interest in and to any awards, or its right, title
            and  interest  in and to other  compensation  made for any  damages,
            losses or  compensation  for  other  rights by reason of a taking in
            eminent  domain,  the  Subordinate  Mortgagee shall release for such
            purpose all of its right, title and interest,  if any, in and to all
            such insurance proceeds,  awards or compensation and the Subordinate
            Mortgagee  agrees that the balance of such proceeds  remaining shall
            be applied to the reduction of principal under the Senior  Mortgage,
            and  if  the  Senior  Mortgagee  holds  such  proceeds,   awards  or
            compensation   and/or  monitors  the   disbursement   thereof,   the
            Subordinate  Mortgagee  agrees that the Senior  Mortgagee shall also
            hold and  monitor  the  disbursement  of such  proceeds,  awards and
            compensation to which the Subordinate Mortgagee is entitled. Nothing
            contained  in this  Agreement  shall be deemed to require the Senior
            Mortgagee,  in any way  whatsoever,  to act for or on  behalf of the
            Subordinate Mortgagee or to hold or monitor any proceeds,  awards or
            compensation in trust for or on behalf of the Subordinate Mortgagee,
            and all or any of such sums so held or monitored  may be  commingled
            with any funds of the Senior Mortgagee;

                  (g)  If   the   Subordinate   Mortgagee   shall   acquire   by
            indemnification, subordination or otherwise, any lien, estate, right
            or other  interest in the  Mortgaged  Property,  that lien,  estate,
            right or other interest shall be subordinate to the Senior  Mortgage
            as provided herein, and the Subordinate  Mortgagee hereby waives any
            and all rights it may acquire by  subrogation  or  otherwise  to the
            lien of the Senior Mortgage or any portion thereof;

                  (h)  The  Subordinate  Mortgagee  shall  not  pledge,  assign,
            hypothecate,  transfer,  convey or sell the Subordinate  Loan or any
            interest in the  Subordinate  Loan or modify,  waive or amend any of
            the terms or provisions  of the  Subordinate  Mortgage,  without the
            prior written consent of the Senior  Mortgagee;  provided,  however,
            that the  Subordinate  Mortgagee may modify,  amend and/or waive any
            provision of the Subordinate  Loan Documents  without the consent or
            approval of the Senior  Mortgagee if,  following such  modification,
            amendment and/or waiver,  the Subordinate Loan Documents comply with
            the terms and provisions of  Subparagraph  (c) of the Section of the
            Senior Mortgage entitled "Subordinate Debt";

                  (i) As to all leases now or  hereafter  in effect with respect
            to the  Mortgaged  Property,  the  Subordinate  Mortgagee  agrees to
            approve all leases which are approved by the Senior  Mortgagee.  The
            Subordinate   Mortgagee  shall  also  enter  into   recognition  and
            non-disturbance  agreements  with any  tenants  to whom  the  Senior
            Mortgagee has granted recognition and  non-disturbance,  on the same
            terms and conditions given by the Senior Mortgagee;

                  (j) The Subordinate Mortgagee hereby expressly consents to and
            authorizes,  at the option of the Senior  Mortgagee,  the release of
            all or any portion of the  Mortgaged  Property  from the lien of the
            Senior Mortgage, and hereby waives any equitable right in respect of
            marshalling it might have, in connection  with any release of all or
            any portion of the Mortgaged  Property by the Senior Mortgagee under
            the Senior Mortgage, to require the separate sales of any portion of
            the Mortgaged Property or to require the Senior Mortgagee to exhaust
            its remedies against any portion of the Mortgaged  Property,  or any
            combination  of the portions of the Mortgaged  Property or any other
            collateral,  or to require the Senior  Mortgagee to proceed  against
            any portion of the Mortgaged Property or combination of the portions
            of the Mortgaged Property or any other collateral, before proceeding
            against any other portion of the Mortgaged  Property or  combination
            of the portions of the Mortgaged Property, and further, in the event
            of any  foreclosure,  the  Subordinate  Mortgagee  hereby  expressly
            consents to and authorizes,  at the option of the Senior  Mortgagee,
            the sale,  either  separately or together,  of all or any portion of
            the Mortgaged Property;

                  (k) The Subordinate  Mortgagee shall not collect  payments for
            the purpose of escrowing taxes, assessments or other charges imposed
            on the Mortgaged Property or insurance premiums due on the insurance
            policies  required  under the  Senior  Mortgage  or the  Subordinate
            Mortgage if the Senior  Mortgagee  is  collecting  payments for such
            purposes,  however,  the Subordinate  Mortgagee may collect payments
            for such  purposes if the Senior  Mortgagee  is not  collecting  the
            same,  provided  such  payments  shall  be  held  in  trust  by  the
            Subordinate Mortgagee to be applied only for such purposes;

                  (l) After  request by the Senior  Mortgagee,  the  Subordinate
            Mortgagee  shall within ten (10) days  furnish the Senior  Mortgagee
            with a statement,  duly acknowledged and certified setting forth the
            original  principal  amount  of the  Subordinate  Note,  the  unpaid
            principal  balance,  all accrued but unpaid  interest  and any other
            sums due and owing  thereunder,  the rate of  interest,  the monthly
            payments  and that there  exists no defaults  under the  Subordinate
            Loan Documents;

                  (m) In any case  commenced  by or against  the  Borrower  or a
            general  partner of Borrower under Chapter 11 of the Bankruptcy Code
            or any similar  provision  thereof or any  similar  federal or state
            statute (a "Reorganization Proceeding"),  the Senior Mortgagee shall
            have the exclusive right to exercise any voting rights in respect of
            the Senior  Mortgagee and the other Senior Loan  Documents,  and the
            Subordinate Mortgagee shall have the exclusive right to exercise any
            voting  rights in respect of its claims  against  the  Borrower or a
            general partner of the Borrower;

                  (n) In  any  Reorganization  Proceeding  with  respect  to the
            Borrower or any general partner of the Borrower, upon any payment or
            distribution (whether in cash, property,  securities,  or otherwise)
            to creditors of the  Borrower or any such general  partner,  (i) the
            indebtedness  under the Senior Loan Documents shall first be paid in
            full in cash before the  Subordinate  Mortgagee shall be entitled to
            receive  any  payment  or other  distribution  on or in  respect  of
            indebtedness  under the Subordinate  Loan Documents,  and (ii) until
            all indebtedness  under the Senior Loan Documents is paid in full in
            cash, any payment or distribution to which the Subordinate Mortgagee
            would be  entitled  but for  this  Subordination  and  Intercreditor
            Agreement (whether in cash, property, securities or otherwise) shall
            be made to the Senior Mortgagee.

                  (o) In  any  Reorganization  Proceeding  with  respect  to the
            Borrower or any general partner of the Borrower, (i) the Subordinate
            Mortgagee  shall  file a proof  of claim in  respect  of its  claims
            against  the  Borrower or any general  partner of the  Borrower  and
            shall send to the Senior  Mortgagee  a copy  thereof  together  with
            evidence  of  the  filing  with  the  appropriate   court  or  other
            authority,  (ii) if the  Subordinate  Mortgagee  should fail to file
            such proof of claim by the tenth (10th) business day before the last
            day for  filing  of  proofs of  claim,  or if the  Senior  Mortgagee
            reasonably  believes  that the  proof of claim so filed is less than
            the proper amount thereof,  then the Senior  Mortgagee may file such
            proof of  claim,  or  corrected  proof of  claim,  on  behalf of the
            Subordinate  Mortgagee,  and  (iii)  if  objection  is  made  to the
            allowance  of any claim of the  Subordinate  Mortgagee,  the  Senior
            Mortgagee shall have the right to intervene and fully participate in
            such  proceedings  and if such rights are denied and the Subordinate
            Mortgagee fails to defend such claim,  then the Senior Mortgagee may
            defend  such  claim in the  name of the  Subordinate  Mortgagee  and
            Subordinate  Mortgagee  grants to Senior  Mortgagee  an  irrevocable
            power of  attorney  coupled  with an  interest  for the  purpose  of
            exercising  any and all  rights  and  remedies  available  to Senior
            Mortgagee at law and in equity,  including  without  limitation such
            rights and remedies  available to Senior Mortgagee  pursuant to this
            Paragraph 4; and

                  (p) To the extent any payment under the Senior Loan  Documents
            (whether by or on behalf of the Borrower, as proceeds of security or
            enforcement  of any right of set-off or otherwise) is for any reason
            repaid or  returned  to the  Borrower or its  insolvent  estate,  or
            avoided,  set  aside  or  required  to be  paid to the  Borrower,  a
            trustee,  receiver  or other  similar  party  under any  bankruptcy,
            insolvency,  receivership  or similar  law,  then the Senior Loan or
            part thereof originally  intended to be satisfied shall be deemed to
            be  reinstated  and  outstanding  to the  extent  of any  repayment,
            return, or other action as if such payment had not occurred.

            (5) The  Senior  Mortgagee  hereby  consents  to the  placing of the
Subordinate  Mortgage  on the  Mortgaged  Property  subject to the terms of this
Agreement.  This consent is limited to the Subordinate  Mortgage described above
and shall not be deemed to (a) be a consent to any future encumbrances or to any
modification, renewal, extension or increase of the Subordinate Mortgage, (b) be
a waiver of the  limitation  on  further  encumbrances  contained  in the Senior
Mortgage,  (c) be a consent to or waiver of any other term or  condition  of the
Senior Mortgage, or (d) prejudice any right or rights which the Senior Mortgagee
may now or in the future have under or in connection with the Senior Mortgage.

            (6)  The  Senior  Mortgagee  and  the  Subordinate  Mortgagee  shall
cooperate  fully with each other in order to  promptly  and fully  carry out the
terms and  provisions  of this  Agreement.  Each party hereto shall from time to
time execute and deliver such other  agreements,  documents or  instruments  and
take  such  other  actions  as may  be  reasonably  necessary  or  desirable  to
effectuate the terms of this Agreement.

            (7)  No  failure  or  delay  on the  part  of any  party  hereto  in
exercising  any  right,  power or remedy  hereunder  shall  operate  as a waiver
thereof,  nor shall any single or partial  exercise of any such right,  power or
remedy  preclude  any other or further  exercise  thereof or the exercise of any
other right, power or remedy hereunder.

            (8)  Each  party  hereto  acknowledges  that to the  extent  that no
adequate  remedy  at law  exists  for  breach  of  its  obligations  under  this
Agreement,  in the  event  either  party  fails to comply  with its  obligations
hereunder,  the other party shall have the right to obtain specific  performance
of the obligations of such  defaulting  party,  injunctive  relief or such other
equitable relief as may be available.

            (9) Any notice to be given under this Agreement  shall be in writing
and  shall  be  deemed  to be given  when  received  by the  party to whom it is
addressed.  Notices  shall be in  writing  and  sent by  registered  mail,  hand
delivery or by special courier (in each case, return receipt requested). Notices
to the other party hereto shall be sent to the address first set forth herein or
such  other  address or  addressees  as shall be  designated  by such party in a
written notice to the other parties.

            (10) In the event of any  conflict  between the  provisions  of this
Agreement  and  the  provisions  of  the  Subordinate   Mortgage  or  the  other
Subordinate Loan Documents, the provisions of this Agreement shall prevail.

            (11) No person, including, without limitation,  Borrower, other than
the  parties  hereto and their  successors  and assigns as holders of the Senior
Mortgage  and the  Subordinate  Mortgagee  shall  have  any  rights  under  this
Agreement.

            (12) This Agreement may be executed in two or more counterparts each
of which shall be deemed an original but all of which together shall  constitute
one and the same instrument.

            (13) No amendment, supplement,  modification,  waiver or termination
of  this  Agreement  shall  be  effective  against  a  party  against  whom  the
enforcement of such amendment, supplement,  modification,  waiver or termination
would be asserted, unless such amendment,  supplement,  modification,  waiver or
termination was made in a writing signed by such party.

            (14) In case  any one or more of the  provisions  contained  in this
Agreement,   or  any  application   thereof,   shall  be  invalid,   illegal  or
unenforceable in any respect,  the validity,  legality and enforceability of the
remaining provisions contained herein, and. any other application thereof, shall
not in any way be affected or impaired thereby.

            (15)  This  Agreement  shall be  construed  in  accordance  with and
governed by the laws of the state where the Mortgaged Property is located.

            (16)  This  Agreement  shall  bind and inure to the  benefit  of the
Senior Mortgagee and the Subordinate Mortgagee and their respective  successors,
permitted transferees and assigns.


      IN WITNESS  WHEREOF,  the parties have duly executed this  Agreement as of
the day and year first above written.

      [ADD SIGNATURES, ACKNOWLEDGMENTS AND EXHIBITS]