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


                                   FORM 10-Q
                                   ---------


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

For the quarterly period ended September 30, 1997

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

For the transition period from ____________ to ____________

Commission File Number 0-10430


                        DE ANZA PROPERTIES - XII, LTD.
            (Exact name of registrant as specified in its charter)

            CALIFORNIA                                95-3601367
(State or other jurisdiction of                  (IRS Employer Iden-
incorporation or organization)                    tification Number)

                      9171 WILSHIRE BOULEVARD, SUITE 627
                       BEVERLY HILLS, CALIFORNIA  90210
         (Address of principal executive offices, including zip code)

                                (310) 550-1111
           (The registrant's telephone number, including area code)


                                   NO CHANGE

             (Former name, former address and former fiscal year,
                         if changed since last report)


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                YES  X   NO 
                                    ---     ---   


         Pursuant to the Securities Exchange Act of 1934 Release 15502 and Rule
240.0-3(b) (17 CFR 240.0-3(b)), the pages of this document have been numbered
sequentially.  The total number of pages contained herein is 18.

                                       1
<PAGE>
 
                               TABLE OF CONTENTS
                               -----------------




PART I.  FINANCIAL INFORMATION
------   ---------------------
<TABLE> 
<C>      <S>                                             <C> 
 
ITEM 1.  FINANCIAL STATEMENTS
 
           Balance Sheets                                  3
 
           Statements of Income                            5
 
           Statements of Changes in Partners'
             Capital (Deficit)                             7
 
           Statements of Cash Flows                        8
 
           Notes to Financial Statements                  10
 
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF
         OPERATIONS                                       15



PART II. OTHER INFORMATION                                17
-------  -----------------    
</TABLE> 

                                       2
<PAGE>
 
PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                        DE ANZA PROPERTIES - XII, LTD.
                            (A Limited Partnership)

                                Balance Sheets
                                  (Unaudited)


<TABLE>
<CAPTION>
                                                  September 30,   December 31,
                                                      1997            1996
                                                  ------------    -----------

                                     ASSETS
 
<S>                                              <C>             <C>
CASH AND CASH EQUIVALENTS - including restricted 
  deposits of $159,096 at December 31, 1996 - 
  Note 1                                           $   848,466    $   631,598
 
 
 
ACCOUNTS RECEIVABLE                                      4,586          7,923
 
PREPAID EXPENSES                                        52,679         39,545
                                                   -----------    -----------
                                                       905,731        679,066
                                                   -----------    -----------
 
NOTES RECEIVABLE - Note 5                              246,098        301,958
                                                   -----------    -----------
 
PROPERTY AND EQUIPMENT - Notes 2 and 5
    Land                                             1,179,884      1,184,605
    Land improvements                                3,535,702      3,437,005
    Buildings and improvements                       9,914,218      9,933,168
    Furniture and equipment                            482,159        469,216
                                                   -----------    -----------
                                                    15,111,963     15,023,994
 
  Less accumulated depreciation                      7,270,584      7,180,893
                                                   -----------    -----------
                                                     7,841,379      7,843,101
                                                   -----------    -----------
 
OTHER ASSETS
  Loan costs - less accumulated amortization
    of $24,875 and $20,008 at September 30, 1997                       
    and December 31, 1996, respectively - Note 2        72,459         77,326
  Other                                                 25,359          4,420
                                                   -----------    -----------
                                                        97,818         81,746
                                                   -----------    -----------
 
                                                   $ 9,091,026    $ 8,905,871
                                                   ===========    ===========
</TABLE>
   See accompanying notes to financial statements.

                                       3
<PAGE>
 
                        DE ANZA PROPERTIES - XII, LTD.
                            (A Limited Partnership)

                          Balance Sheets (Continued)
                                  (Unaudited)


<TABLE>
<CAPTION>
                                                  September 30,   December 31,
                                                      1997            1996
                                                  -------------   ------------

                  LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
 
<S>                                                <C>             <C>
ACCOUNTS PAYABLE AND ACCRUED EXPENSES -
  including $9,716 and $6,399 due to
  related party at September 30, 1997
  and December 31, 1996, respectively              $   143,159      $  92,710
 
DEPOSITS AND ADVANCE RENTALS                            43,560         49,182
 
DEFERRED GAIN ON SALE - Note 5                              -         159,096
 
MANAGEMENT AND CONDOMINIUM CONVERSION
  FEES PAYABLE TO AFFILIATE OR RELATED PARTY -   
  Note 3                                               796,331        796,331
 
 
SECURED NOTE PAYABLE - Note 2                        4,183,333      4,222,320
                                                   -----------     ----------
                                                     5,166,383      5,319,639
                                                   -----------     ----------
 
PARTNERS' CAPITAL (DEFICIT)
  General partners                                  (1,639,555)    (1,648,564)
  Limited partners, 22,719 units issued              
    and outstanding                                  5,564,198      5,234,796
                                                   -----------     ----------
                                                     3,924,643      3,586,232
                                                   -----------     ----------
 
                                                   $ 9,091,026     $8,905,871
                                                   ===========     ==========
</TABLE>

   See acccompanying notes to financial statements.

                                       4
<PAGE>
 
                        DE ANZA PROPERTIES - XII, LTD.
                            (A Limited Partnership)

                             Statements of Income
                                  (Unaudited)
<TABLE>
<CAPTION>
 
 
                                                  Nine Months     Nine Months
                                                     Ended           Ended
                                                 September 30,   September 30,
                                                     1997            1996
                                                -------------   -------------
<S>                                           <C>              <C>
 
INCOME
  Rent                                            $1,697,962      $1,685,231
  Other                                              101,198          36,412
  Interest and dividends                              38,159          44,506
  Gain on sale of property and equipment             236,094          29,001
                                                  ----------      ----------
                                                   2,073,413       1,795,150
                                                  ----------      ----------
 
EXPENSES
  Interest                                           230,975         237,442
  Maintenance, repairs and supplies                  183,728         187,954
  Salaries - including $11,736 and $13,759
    paid to related party in 1997 and           
    1996, respectively - Note 3                      149,211         146,917
  Utilities                                          135,789         134,275
  Professional fees and services -
    including $43,980 and $47,766 paid
    to related party in 1997 and 1996,           
    respectively - Note 3                            119,559         125,372
  Real estate taxes                                  116,638         114,940
  Depreciation and amortization                      106,989         460,160
  Other                                               54,745          69,356
  Insurance                                           44,599          48,363
  Payroll taxes and employee benefits                 30,269          30,986
                                                  ----------      ----------
                                                   1,172,502       1,555,765
                                                  ----------      ----------
 
NET INCOME                                        $  900,911      $  239,385
                                                  ==========      ========== 
NET INCOME
  GENERAL PARTNERS                                $    9,009      $    2,394
                                                  ==========      ==========
  LIMITED PARTNERS                                $  891,902      $  236,991
                                                  ==========      ==========
 
INCOME PER 1% GENERAL
  PARTNER INTEREST - Note 4                       $    90.09      $    23.94
                                                  ==========      ==========
 
INCOME PER LIMITED
  PARTNERSHIP UNIT - Note 4                       $    39.26      $    10.43
                                                  ==========      ==========
</TABLE>

   See accompanying notes to financial statements.

                                       5
<PAGE>
 
                        DE ANZA PROPERTIES - XII, LTD.
                            (A Limited Partnership)

                             Statements of Income
                                  (Unaudited)
<TABLE>
<CAPTION>
 
 
                                                 Three Months    Three Months
                                                    Ended           Ended
                                                  September 30,   September 30,
                                                      1997            1996
                                                 -------------   -------------
<S>                                              <C>             <C>
 
INCOME
  Rent                                             $563,403         $580,574
  Other                                               9,303            8,735
  Interest and dividends                             12,919           15,132
  Gain on sale of property and equipment            159,096           29,001
                                                   --------         --------
                                                    744,721          633,442
                                                   --------         --------
 
EXPENSES
  Interest                                           77,484           78,223
  Maintenance, repairs and supplies                  56,482           56,672
  Salaries - including $4,124 and $4,253
    paid to related party in 1997 and            
    1996, respectively - Note 3                      52,426           49,410
  Utilities                                          47,282           43,797
  Professional fees and services -
    including $14,923 and $16,406 paid
    to related party in 1997 and 1996,
    respectively - Note 3                            20,943           33,080
  Real estate taxes                                  38,832           39,055
  Depreciation and amortization                       1,672          153,387
  Other                                              10,401           25,009
  Insurance                                          14,761           15,818
  Payroll taxes and employee benefits                 8,920           10,192
                                                   --------         --------
                                                    329,203          504,643
                                                   --------         --------
 
NET INCOME                                         $415,518         $128,799
                                                   ========         ========
 
NET INCOME
  GENERAL PARTNERS                                 $  4,155         $  1,288
                                                   ========         ========
  LIMITED PARTNERS                                 $411,363         $127,511
                                                   ========         ========
 
INCOME PER 1% GENERAL
  PARTNER INTEREST - Note 4                        $  41.55         $  12.88
                                                   ========         ========
 
INCOME PER LIMITED
  PARTNERSHIP UNIT - Note 4                        $  18.11         $   5.61
                                                   ========         ========
</TABLE>


  See accompanying notes to financial statements.

                                       6
<PAGE>
 
                            (A Limited Partnership)

             Statements of Changes in Partners' Capital (Deficit)
                                  (Unaudited)

               For the Nine Months Ended September 30, 1997 and
                     For the Year Ended December 31, 1996

<TABLE>
<CAPTION>
 
 
 
                                                       General        Limited
                                          Total        Partners      Partners
                                       -----------   ------------   -----------
<S>                                    <C>           <C>            <C>
 
BALANCE - January 1, 1996               $4,070,413    $(1,652,362)   $5,722,775
 
DISTRIBUTIONS TO PARTNERS                 (864,000)            -       (864,000)
 
NET INCOME - for the year
  ended December 31, 1996                  379,819          3,798       376,021
                                        ----------    -----------    ----------
 
BALANCE - December 31, 1996              3,586,232     (1,648,564)    5,234,796
 
DISTRIBUTIONS TO PARTNERS                 (562,500)            -       (562,500)
 
NET INCOME - for the nine
  months ended September 30,
  1997                                     900,911          9,009       891,902
                                        ----------    -----------    ----------
 
BALANCE - September 30, 1997            $3,924,643    $(1,639,555)   $5,564,198
                                        ==========    ===========    ==========
</TABLE>

  See accompanying notes to financial statements.

                                       7
<PAGE>
 
                        DE ANZA PROPERTIES - XII, LTD.
                            (A Limited Partnership)

                           Statements of Cash Flows
                                  (Unaudited)
<TABLE>
<CAPTION>
 
 
                                            Nine Months      Nine Months
                                               Ended            Ended
                                           September 30,    September 30,
                                                1997            1996
                                           --------------   -------------
<S>                                        <C>              <C>
 
CASH FLOWS FROM OPERATING ACTIVITIES
  Gross rents received from real estate                        
    operations                                $1,694,912       $1,679,250
  Cash paid to suppliers and employees -
    including $76,804 and $65,194
    paid to related party in 1997
    and 1996, respectively                      (796,394)        (807,505)
  Interest paid                                 (231,402)        (238,503)
  Interest and other income received             139,720           81,671
                                              ----------      -----------
 
      Net cash provided by
       operating activities                      806,836          714,913
                                              ----------      -----------
 
CASH FLOWS FROM INVESTING ACTIVITIES
  Additions to property and equipment           (114,580)        (210,493)
  Payments received on notes receivable           55,860          134,928
  Sale of property and equipment                 100,000               -
  Sales and closing costs                        (29,761)              -
                                               ---------      -----------
 
     Net cash provided by (used in)
         investing activities                     11,519          (75,565)
                                               ---------      -----------
 
CASH FLOWS FROM FINANCING ACTIVITIES
  Distributions to partners                     (562,500)        (525,000)
  Principal payments on secured 
    notes payable                                (38,987)         (28,058)
                                               ---------      -----------
 
      Net cash used in
       financing activities                     (601,487)        (553,058)
                                               ---------      -----------
 
NET INCREASE IN CASH AND CASH
   EQUIVALENTS                                   216,868           86,290

 
CASH AND CASH EQUIVALENTS:
   BALANCE AT BEGINNING OF PERIOD                631,598          671,430
                                              ----------      -----------
 
     BALANCE AT END OF PERIOD                 $  848,466       $  757,720
                                              ==========      ===========
</TABLE>

   See accompanying notes to financial statements.

                                       8
<PAGE>
 
                        DE ANZA PROPERTIES - XII, LTD.
                            (A Limited Partnership)

                     Statements of Cash Flows (Continued)
                                  (Unaudited)
<TABLE>
<CAPTION>


                                                           Nine Months      Nine Months
                                                              Ended            Ended
                                                          September 30,    September 30,
                                                               1997            1996
                                                          --------------   -------------
<S>                                                       <C>              <C>

RECONCILIATION OF NET INCOME TO NET
   CASH PROVIDED BY OPERATING ACTIVITIES
     Net income                                              $ 900,911       $ 239,385
     Adjustments to reconcile net income
      to net cash provided by
      operating activities
        Depreciation and amortization                          106,989         460,160
        Gain on sale of property and equipment                (236,094)        (29,001)
     Changes in operating assets and
       liabilities
         Decrease in accounts receivable                         3,337             247
         Increase in prepaid expenses                          (13,134)        (11,260)
         Decrease in other assets                                   -              716
         Increase in accounts payable and
           accrued expenses                                     50,449          59,011
         Decrease in deposits and advance
           rentals                                              (5,622)         (4,345)
                                                              --------       ---------

           Net cash provided by
           operating activities                               $806,836        $714,913
                                                              ========      ==========

</TABLE>

  See accompanying notes to financial statements.

                                       9
<PAGE>
 
                        DE ANZA PROPERTIES - XII, LTD.
                            (A Limited Partnership)

                         Notes to Financial Statements
                                  (Unaudited)

                 September 30, 1997 and December 31, 1996 and
        For the Nine and Three Months Ended September 30, 1997 and 1996


NOTE 1 -    BASIS OF PRESENTATION

            The accompanying financial statements have been prepared in
            accordance with generally accepted accounting principles for interim
            financial information and with the instructions to Form 10-Q and
            Regulation S-X. 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
            management, all adjustments (consisting of normal recurring
            accruals) have been included. Operating results during the nine and
            three months ended September 30, 1997 are not necessarily indicative
            of the results that may be expected for the year ending December 31,
            1997. For further information, refer to the financial statements and
            footnotes thereto included in the Partnership's annual report on
            Form 10-K for the year ended December 31, 1996.

            Cash and Cash Equivalents
            -------------------------

            The Partnership invests its cash not needed for working capital in
            highly liquid short-term investments consisting primarily of money
            market funds and certificates of deposit, with original maturities
            ranging generally from one to three months. The Partnership
            considers all such items to be cash equivalents.

            Depreciation
            ------------

            Pursuant to generally accepted accounting principles the Partnership
            ceased to depreciate Warner Oaks Apartments ("Warner Oaks") from the
            time it determined to sell the property (see Note 5).
 
NOTE 2 -    SECURED NOTE PAYABLE
 
            Secured note payable at September 30, 1997 and December 31, 1996
            consisted of:

<TABLE> 
<CAPTION> 
                                                     September 30,       December 31,
                                                         1997               1996
                                                     ------------       ------------
            <S>                                      <C>                <C>
            Note collateralized by a first 
            trust deed, payable in monthly 
            installments of $29,997, including 
            interest until December 15, 1997.
            Thereafter, the monthly payment 
            changes annually on each December 
            15th.  Interest accrues at 2.5% 
            over the FHLB's 11th District Cost 
            of Funds Index, not to exceed 12.9%, 
            adjusted monthly. Unpaid principal 
            and accrued interest are due 
            November 15, 2008. The interest rate 
            in effect at September 30, 1997 and 
            December 31, 1996 was 7.39% and 
            7.34%, respectively.                     $4,183,333       $4,222,320
                                                     ==========       ==========
 
</TABLE> 
 
 

                                       10
<PAGE>
 
                        DE ANZA PROPERTIES - XII, LTD.
                            (A Limited Partnership)

                   Notes to Financial Statements (Continued)
                                  (Unaudited)

                 September 30, 1997 and December 31, 1996 and
        For the Nine and Three Months Ended September 30, 1997 and 1996

NOTE 3 -    TRANSACTIONS WITH RELATED PARTIES

            Pursuant to a former management agreement dated October 1, 1985, as
            amended, De Anza Assets, Inc., a former affiliate of the operating
            general partner (OGP), was paid a management fee in the amount of 5%
            of the annual gross receipts from the operations of the
            Partnership's properties. The payment of this fee is subordinated to
            the priority distribution to the limited partners of 7% of their
            adjusted capital contributions each year and is noncumulative,
            except in the case of a sale, refinancing or other disposition of
            the Partnership's properties. In that case, the difference between
            the management fee actually paid and the management fee that would
            have been paid if it were not subordinated is payable out of
            proceeds of the sale, refinancing or other disposition after payment
            of the limited partners' priority return and capital contribution
            and the general partners' incentive interest. However, management
            fees payable subsequent to a consummated refinancing are not
            subordinated to the limited partners' priority return to the extent
            the subordination would have been caused by increased debt service
            charges. At September 30, 1997 and December 31, 1996, cumulative
            accrued fees of $565,022 to De Anza Assets, Inc. have been
            subordinated and are included in management and condominium
            conversion fees payable to affiliate or related party, as reflected
            in the balance sheets. Shortly before its sale to an affiliate of
            Manufactured Home Communities, Inc. (MHC), as discussed in Note 5,
            De Anza Assets, Inc. assigned its rights to receipt of these fees to
            the Gelfand Family Trust.

            On August 18, 1994, subsequent to the sale of the Mark and the
            property management business of De Anza Group, Inc. (DAG), as
            discussed in Note 5, the property management of Warner Oaks and the
            two remaining spaces at San Luis Bay was assumed by Terra Vista
            Management, Inc. (Terra Vista). Terra Vista is wholly owned by
            Michael D. Gelfand, president of the OGP and the son of Herbert M.
            Gelfand. Herbert M. Gelfand, together with Beverly Gelfand, is the
            sole shareholder of the OGP and an individual general partner.
            Management fees of $86,074 and $85,614 were deferred, but not
            accrued for the nine months ended September 30, 1997 and 1996,
            respectively. Of the $86,074, $28,578 is attributable to the three
            months ended September 30, 1997 (compared to $29,453 deferred, but
            not accrued for the three months ended September 30, 1996). The
            Partnership has determined, that based on the anticipated net
            proceeds from the disposition or refinancing of the property and
            their allocation under the terms of the Partnership Agreement, that
            it is not probable any deferred management fees would be paid.
            However, in the event there were sufficient proceeds, the deferred
            management fees would be paid at that time. At September 30, 1997
            and December 31, 1996, cumulative accrued fees to Terra Vista of
            $153,500, have been subordinated and are included in management and
            condominium conversion fees payable to affiliate or related party.
            The Gelfand Family Trust has agreed to share equally any payment
            which is made to the Gelfand Family Trust for deferred management
            fees with Terra Vista until Terra Vista has been paid all
            outstanding deferred management fees due Terra Vista.

            Pursuant to the partnership agreement, a condominium conversion fee
            equal to 1% of the sales price of the San Luis Bay homesites sold is
            due to an

                                       11
<PAGE>
 
                        DE ANZA PROPERTIES - XII, LTD.
                            (A Limited Partnership)

                   Notes to Financial Statements (Continued)
                                  (Unaudited)

                 September 30, 1997 and December 31, 1996 and
        For the Nine and Three Months Ended September 30, 1997 and 1996

NOTE 3 -    TRANSACTIONS WITH RELATED PARTIES (Continued)

            affiliate of the OGP (see Note 5). Payment of this fee has been
            deferred pursuant to the partnership agreement's requirement
            regarding subordination to payment of the limited partners' priority
            return and capital contribution, the general partners' incentive
            interest and deferred management fees. Subordinated cumulative
            accrued fees of $77,809 have been included in management and
            condominium conversion fees payable to an affiliate or related party
            at September 30, 1997 and December 31, 1996. Shortly before the sale
            to MHC, De Anza Assets, Inc. assigned its rights to receive these
            fees to the Gelfand Family Trust.

            In addition, Terra Vista was paid $76,804 and $65,194 during the
            nine months ended September 30, 1997 and 1996, respectively, for
            performing bookkeeping, legal, regional management, computer,
            disposition and investor relations services necessary for the
            operation of the Partnership and its properties. Of the $76,804,
            $37,814 is attributable to the three months ended September 30, 1997
            (compared to $21,679 paid for the three months ended September 30,
            1996).

NOTE 4 -    INCOME PER 1% GENERAL PARTNER INTEREST AND LIMITED PARTNERSHIP UNIT

            Income per limited partnership unit is computed based on the limited
            partners' share of net income as shown on the Statements of Income
            and Changes in Partners' Capital (Deficit) and the number of limited
            partnership units outstanding (22,719 units). The general partners'
            share of net income has not been included in this computation.
            Income per 1% general partner interest is computed based on the
            general partners' share of net income as shown on the Statements of
            Operations and Changes in Partners' Capital (Deficit).

NOTE 5 -    SALE OF PROPERTY AND EQUIPMENT

            San Luis Bay
            ------------

            On May 2, 1989, the Partnership entered into an agreement to sell
            San Luis Bay Mobile Estates (the 162-space mobile home community in
            Avila Beach, California) to the residents for an aggregate sales
            price of $8,850,000 and, pursuant to that agreement, subdivided the
            property into condominium units in 1991. The Partnership provided
            purchase money financing for up to 80% of the individual homesite
            price, payable in monthly payments, including interest at 10%, based
            on a loan amortization schedule of 30 years, with a balloon payment
            of unpaid principal and interest due at the end of seven years. At
            September 30, 1997 and December 31, 1996, respectively, the
            outstanding amounts due under such notes totaled $246,098 and
            $301,958. Those residents who purchased their homesites for cash
            received a 10% discount off their purchase price.

                                       12
<PAGE>
 
                        DE ANZA PROPERTIES - XII, LTD.
                            (A Limited Partnership)

                   Notes to Financial Statements (Continued)
                                  (Unaudited)

                 September 30, 1997 and December 31, 1996 and
        For the Nine and Three Months Ended September 30, 1997 and 1996


NOTE 5 -    SALE OF PROPERTY AND EQUIPMENT (Continued)

            San Luis Bay (continued)
            ------------------------

            The Partnership sold 160 homesites prior to 1995. On May 1, 1997,
            the Partnership sold one of the two remaining spaces at San Luis Bay
            for $100,000. Net proceeds, after commission and sale and closing
            costs of $7,112, was $92,888. The sole remaining homesite is leased
            to a resident.
 
            The Mark
            --------

            On August 18, 1994 the Partnership sold The Mark to an affiliate of
            MHC, a real estate investment trust, as part of an overall
            transaction for the sale of the related management business of DAG
            and other mobile home communities affiliated with DAG. In connection
            with the sale, the Partnership established various reserves totaling
            $230,097. The $230,097 was used to establish the following cash
            reserves:
 

                 MHC Reserve                            $ 42,000
                 General Reserve                         130,094
                 Independent Committee Reserve            58,003

            The MHC Reserve was required by MHC. It was released in 1995, at
            which time the gain on sale was recognized. The General Reserve and
            Independent Committee Reserve were established to fund contingent
            liabilities that may arise out of the MHC transaction. In August
            1996, $29,001 of the Independent Committee Reserve was released and
            the gain on sale recognized and included in net income. In August
            1997, the remaining balance of the Independent Committee Reserve,
            $29,002, and the General Reserve of $130,094, were released and the
            gain on sale recognized and included in net income.

            Pursuant to the guidelines of Financial Accounting Standards No. 66,
            "Accounting for Sales of Real Estate," the Partnership deferred in
            1994 the recognition of gain on that portion of the sales proceeds,
            represented by the MHC Reserve, General Reserve and Independent
            Committee Reserve, totaling $230,097. As these reserves are released
            or expended, gain on sale is recognized. At December 31, 1996,
            $159,096 of sale proceeds have been deferred and are included in
            deferred gain on sale, as reflected in the balance sheets while at
            September 30, 1997, all reserves were released with no deferred gain
            on sale reflected in the balance sheets.

                                       13
<PAGE>
 
                        DE ANZA PROPERTIES - XII, LTD.
                            (A Limited Partnership)

                   Notes to Financial Statements (Continued)
                                  (Unaudited)

                 September 30, 1997 and December 31, 1996 and
        For the Nine and Three Months Ended September 30, 1997 and 1996


NOTE 6 -    SUBSEQUENT EVENT - POTENTIAL SALE OF WARNER OAKS APARTMENTS

            In March 1997, the Partnership listed Warner Oaks Apartments,
            located in Los Angeles, its remaining property, for sale. In October
            1997, the Partnership entered into a contingent contract to sell the
            property to Bay Apartment Communities, Inc., an unaffiliated entity,
            for $20 million dollars, all cash. The currently scheduled closing
            date is in January 1998, however there can be no assurance that a
            sale will be consummated, or if consummated that it will occur at
            that time or for that amount. Upon such a sale it is anticipated
            that the Partnership would be dissolved and terminated.

                                       14
<PAGE>
 
ITEM 2.                 MANAGEMENT'S DISCUSSION AND ANALYSIS
                  OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Liquidity
---------


  The Partnership's quick ratios were 3.6:1 and 2.4:1, including unrestricted
  cash balances of $848,466 and $472,502 at September 30, 1997 and December 31,
  1996, respectively. The increase in cash is mainly due to notes receivable
  prepayments, the sale of a space at San Luis Bay and the release of restricted
  cash reserves. The Partnership's cash balance is its immediate source of
  liquidity.

  On a long-term basis, the Partnership's liquidity is sustained primarily from
  cash flows from operations, which during the nine months ended September 30,
  1997 were approximately $807,000. Should it become necessary to improve
  liquidity, the Partnership can reduce partner distributions, which totaled
  $562,500 during the nine months ended September 30, 1997, arrange a short-term
  line of credit or refinance Warner Oaks.

  Subsequent to the sale of The Mark, the Partnership continues to operate
  Warner Oaks, the remaining property. In October 1997, the Partnership entered
  into a contingent contract to sell Warner Oaks and anticipates that a closing
  would occur in January 1998; however, there can be no assurances that a sale
  will occur. The Partnership also owns one space at San Luis Bay Mobile Estates
  and various notes receivables related to the 1991 San Luis Bay sale (see Note
  5 to the Financial Statements). Upon sale of Warner Oaks, the Partnership
  expects to pursue the sale of its remaining space at San Luis Bay and
  collection of its notes receivable in order to liquidate and dissolve the
  Partnership in 1998.

  In November 1993, the Partnership refinanced Warner Oaks with a variable
  interest rate loan. The interest rate for the initial three months was 6.25%,
  thereafter the loan bears interest at 250 basis points over the Eleventh
  District Cost of Funds with caps on the maximum annual payment change of 7.5%
  of the current payment, and an interest rate cap of 12.9% over the life of the
  loan. This loan is subject to negative amortization. Future liquidity will be
  affected, unfavorably or favorably, to the extent the payment rate fluctuates.
  At September 30, 1997, the interest rate in effect was 7.39%.

  The Partnership has sold 161 of 162 spaces at San Luis Bay as of September 30,
  1997 (see Note 5 to the Financial Statements). Liquidity is expected to
  improve as the notes receivable from the buyers of San Luis Bay spaces mature,
  as discussed in Note 5 to the Financial Statements. As of September 30, 1997,
  the amount of the notes receivable outstanding was approximately $246,000.
  Liquidity also improves when the notes receivable are prepaid and if the
  remaining space is sold.

  Other than as described elsewhere, there are no known trends, demands,
  commitments, events or uncertainties which are reasonably likely to materially
  affect the Partnership's liquidity.

                                       15
<PAGE>
 
ITEM 2.              MANAGEMENT'S DISCUSSION AND ANALYSIS
         OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)



Capital Resources
-----------------


  The Partnership anticipates spending approximately $139,000 in 1997 for
  physical improvements at Warner Oaks, approximately $24,000 of which will be
  spent during the remainder of 1997. The Partnership is continuously reviewing
  the necessity for such expenditures in light of the expected sale of Warner
  Oaks. Funds for these improvements will be provided by cash generated from
  operations.

  As described above the Partnership may sell Warner Oaks in January 1998. No
  assurances can be made that such a sale will occur. However, if it does the
  Partnership would endeavor to dispose of its remaining space at San Luis Bay
  and collect its notes receivable in order to liquidate as soon as practical.

  Other than as described above, there are no known material trends, favorable
  or unfavorable, in the Partnership's capital resources. The Partnership does
  not contemplate any other material changes in the mix of its capital
  resources, other than as described above.


Results of Operations
---------------------


  Rental income increased 0.8% and decreased 3.0% during the nine and three
  months ended September 30, 1997, respectively, over the same periods in 1996,
  primarily due to fluctuating occupancy. Other income increased in 1997 due to
  receipt of a legal settlement of litigation regarding a matter at The Mark
  that occurred prior to the sale of that property in 1994. Gain on sale income
  increased in 1997 due to sale of a space at San Luis Bay and recognition of
  deferred income attributable to the 1994 sale of The Mark property.

  Expenses decreased 24.6% and 34.8% during the nine and three months ended
  September 30, 1997, respectively, over the same periods in 1996. The decrease
  is almost entirely due to lower depreciation and amortization expense in 1997
  because, according to generally accepted accounting principles, from the time
  the Partnership determined to sell Warner Oaks it ceased to depreciate the
  carrying value of the assets. Additionally, interest expense decreased in 1997
  due to declining principal balances. Other expense decreased in 1997 due to
  responses to 1996 offers for the Partnership's Units not being repeated in
  1997.

  Other than as described above, there are no known trends or uncertainties
  which have had or can be reasonably expected to have a material effect on
  continuing operations.

                                       16
<PAGE>
 
PART II.  OTHER INFORMATION



ITEM NUMBER
-----------


  1.      LEGAL PROCEEDINGS

          No new material legal proceedings were commenced during the three
          months ended September 30, 1997 and there are none pending.

  2.      CHANGES IN SECURITIES

          None.

   3.     DEFAULTS UPON SENIOR SECURITIES

          None.

   4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          None.

   5.     OTHER INFORMATION

          The Partnership has entered into a contingent contract to sell its
          last remaining property, Warner Oaks Apartments, for $20 million, all
          cash, to Bay Apartment Communities, Inc., an unaffiliated entity. The
          sale is scheduled to occur in January 1998. There is no assurance that
          the property will be sold. If sold, the Partnership will be dissolved
          and liquidated, including disposing of the remaining space at San Luis
          Bay and collection of the notes receivable. It is expected that the
          sale of Warner Oaks will result in a taxable gain.

   6.     EXHIBITS AND REPORTS ON FORM 8-K

          None.

                                       17
<PAGE>
 
PART II.  OTHER INFORMATION (Continued)



                                   SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                             DE ANZA PROPERTIES - XII, LTD.
                                                      (Registrant)
 
 
 
 
                                             By  DE ANZA CORPORATION
                                                 A California Corporation
                                                 Operating General Partner
 
 
 
 
Date:  November 12, 1997                     By  /s/ Michael D. Gelfand
                                                 ----------------------
                                                     Michael D. Gelfand
                                                     President and
                                                      Chief Financial Officer

                                       18