NOTE AND MORTGAGE MODIFICATION AND EXTENSION AGREEMENT

         WHEREAS,   SOUTHMARK  REALTY  PARTNERS,   LTD.,  a  California  limited
partnership  n/k/a McNEIL REAL ESTATE FUND XXI, L.P., having an address at 13760
Noel Road,  Suite 600, LB 70, Dallas,  Texas 75240  (hereinafter  referred to as
"Maker")  executed a Purchase  Money  Promissory  Note,  dated October 15, 1984,
payable to the order of LURU COMPANY, an Ohio partnership, and KERMIT C. RUDOLPH
and NANCY  RUDOLPH,  having  an  address  at 3 Maple  Street,  Perrysburg,  Ohio
(hereinafter  collectively  referred to as "LuRu"),  in the  original  principal
amount  of  THREE   MILLION   FOUR   HUNDRED   THOUSAND   AND   NO/100   DOLLARS
($3,400,000.00),  together with interest on the unpaid principal balance thereof
at the rate therein provided (the "Note"); and

         WHEREAS,  the Note is secured by a Mortgage dated October 15, 1984 (the
"Mortgage")  between the Maker,  as  mortgagor,  and LuRu,  as  mortgagee,  that
conveys to the  mortgagee  a first in priority  lien on real estate  situated in
Perrysburg Township,  Wood County,  State of Ohio and the improvements  situated
thereon and  appurtenances  thereto  and creates a security  interest in certain
personal  property used in connection  with such real  property,  which real and
personal property are more fully described in the Mortgage; and

         WHEREAS,  the Note  provides  that  the  entire  outstanding  principal
balance of the Note and all accrued and unpaid interest thereon shall be due and
payable on December 15, 1997 (the "Maturity Date"); and

         WHEREAS, the Mortgage provides that the Mortgage shall be and remain in
full  force and  effect,  and a  continuing  lien until the Note  obligation  so
secured and all renewals and extensions thereof have been paid in full; and

         WHEREAS,  LuRu  assigned  all of its right,  title and  interest in the
Mortgage, together with the indebtedness secured by the Mortgage, to McNeil Real
Estate Fund XX, L.P., a California  limited  partnership  ("Assignee") by way of
Assignment of Mortgage executed to be effective December 4, 1997; and

         WHEREAS, as of December 15, 1997, the principal balance of the Note was
Two Million  Nine  Hundred  Ninety-Seven  Thousand  Five  Hundred Ten and 91/100
Dollars  ($2,997,510.91)  and the  balance of accrued  interest  was  Thirty-One
Thousand Nine Hundred Ninety-Eight and 43/100 Dollars ($31,998.43);

         NOW, THEREFORE, in consideration of Ten and No/100 Dollars ($10.00) and
other good and valuable consideration,  the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

         1. The Maturity Date of the Note is hereby extended to March 1, 1998. A
payment of Thirty-Three  Thousand Three Hundred  Thirty-Three and No/100 Dollars
($33,333.00) shall continue to be due and payable on the fifteenth (15th) day of
each month  hereafter  through and including  March 1, 1998.  Interest  accruing
before and after  October  15,  1997 until March 1, 1998 shall be payable at the
pre-Maturity Date rate as provided in the Note.


<PAGE>

         2. The Mortgage and any other documents evidencing, governing, securing
or  guaranteeing  the  Loan  evidenced  by the  Note  (collectively,  the  "Loan
Instruments")  are  amended  and  modified  in  a  manner  consistent  with  the
modifications  contained herein.  All references to the Note in the Mortgage and
any other  Loan  Instruments  shall be deemed  to be  references  to the Note as
modified hereby and all references in the Note to the Mortgage or any other Loan
Instruments  shall be deemed to be references to the Mortgage and any other Loan
Instruments as modified hereby.

         3. Except as expressly  extended  hereby,  the terms and  conditions of
the  Note and  the other Loan  Instruments are and will remain in full force and
effect.

         This Note and Mortgage Modification and Extension Agreement is executed
as of the date set forth in the acknowledgments below.

                                     MAKER:

                                     McNEIL REAL ESTATE FUND XXI, L.P.,
                                     a California limited partnership

                                     By: McNEIL PARTNERS, L.P.,
                                         a Delaware limited partnership,
                                         General Partner

                                         By: McNEIL INVESTORS, INC.,
                                             a Delaware corporation,
                                             General Partner


                                             By: /s/  Ron K. Taylor
                                                --------------------------------
                                                 Ron K. Taylor,
                                                 President


<PAGE>



                                    ASSIGNEE:

                                    McNEIL REAL ESTATE FUND XX, L.P.,
                                    a California limited partnership

                                    By:  McNEIL PARTNERS, L.P.,
                                         a Delaware limited partnership,
                                         General Partner

                                         By: McNEIL INVESTORS, INC.,
                                             a Delaware corporation,
                                             General Partner

                                             By: /s/  Ron K. Taylor
                                                --------------------------------
                                                 Ron K. Taylor,
                                                 President



STATE OF TEXAS          )
                        )
COUNTY OF DALLAS        )

         This  instrument  was  acknowledged  before  me on  this  16th  day  of
December,  1997,  by RON K.  TAYLOR,  President  of McNEIL  INVESTORS,  INC.,  a
Delaware  corporation,  as general partner of McNEIL PARTNERS,  L.P., a Delaware
limited partnership,  as general partner of McNEIL REAL ESTATE FUND XXI, L.P., a
California  limited  partnership,  for and on  behalf  of said  corporation  and
limited partnerships.


                                    /s/  Mary K. Schwartz
                                    --------------------------------------------
                                    Notary Public, State of Texas

                                    Mary K. Schwartz
                                    --------------------------------------------
                                    Notary's Printed Name

                                    My Commission Expires:
                                    --------------------------------------------
                                    August 3, 2001


                                             Notary Stamp Here



<PAGE>


STATE OF TEXAS          )
                        )
COUNTY OF DALLAS        )

         This  instrument  was  acknowledged  before  me on  this  16th  day  of
December,  1997,  by RON K.  TAYLOR,  President  of McNEIL  INVESTORS,  INC.,  a
Delaware  corporation,  as general partner of McNEIL PARTNERS,  L.P., a Delaware
limited  partnership,  as general partner of McNEIL REAL ESTATE FUND XX, L.P., a
California  limited  partnership,  for and on  behalf  of said  corporation  and
limited partnerships.


                                    /s/  Mary K. Schwartz
                                    --------------------------------------------
                                    Notary Public, State of Texas

                                    Mary K. Schwartz
                                    --------------------------------------------
                                    Notary's Printed Name

                                    My Commission Expires:
                                    --------------------------------------------
                                    August 3, 2001


                                            Notary Stamp Here