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 September 30, 2005


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


             For the transition period from _________to _________

                         Commission file number 0-14187


                 CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
        (Exact name of small business issuer as specified in its charter)



              California                                        94-2940208
    (State or other jurisdiction of                          (I.R.S. Employer
     incorporation or organization)                         Identification No.)

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

                                 (864) 239-1000
                         (Registrant's telephone number)


Check  whether the issuer (i) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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 ___

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) Yes __ No X_

<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1.     Financial Statements

               CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3

                                  BALANCE SHEET
                                   (Unaudited)
                        (in thousands, except unit data)

                               September 30, 2005

<TABLE>
<CAPTION>

Assets
<S>                                                                       <C>
   Cash and cash equivalents                                              $ 4,878
   Receivables and deposits                                                   661
   Restricted escrows                                                         558
   Other assets                                                             1,413
   Investment properties:
      Land                                               $  8,641
      Buildings and related personal property              56,579
                                                           65,220
      Less accumulated depreciation                       (34,065)         31,155
                                                                         $ 38,665
Liabilities and Partners' Deficit
Liabilities
   Accounts payable                                                        $ 742
   Tenant security deposit liabilities                                        286
   Accrued property taxes                                                     507
   Other liabilities                                                          538
   Mortgage notes payable (Note C)                                         54,100

Partners' Deficit
   General partner                                       $ (1,016)
   Limited partners (383,033 units outstanding)           (16,492)        (17,508)
                                                                         $ 38,665

                See Accompanying Notes to Financial Statements
</TABLE>

<PAGE>


               CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3

                            STATEMENTS OF OPERATIONS
                                   (Unaudited)
                      (in thousands, except per unit data)

<TABLE>
<CAPTION>
                                                  Three Months              Nine Months
                                              Ended September 30,       Ended September 30,
                                               2005         2004         2005        2004
Revenues:
<S>                                          <C>          <C>          <C>          <C>
  Rental income                              $ 2,786      $ 2,579      $ 8,098      $ 7,709
  Other income                                   371          387        1,063        1,066
  Casualty gain (Note D)                          --           92           --           92
      Total revenues                           3,157        3,058        9,161        8,867

Expenses:
  Operating                                    1,771        1,550        4,804        4,341
  General and administrative                     145          175          438          510
  Depreciation                                   832          763        2,416        2,301
  Interest                                       919          862        2,686        2,599
  Property taxes                                 218          214          660          659
      Total expenses                           3,885        3,564       11,004       10,410

Net loss                                      $ (728)      $ (506)     $(1,843)     $(1,543)

Net loss allocated to general
  partner (1%)                                 $ (7)        $ (5)       $ (18)       $ (15)
Net loss allocated to limited
  partners (99%)                                (721)        (501)      (1,825)      (1,528)

                                              $ (728)      $ (506)     $(1,843)     $(1,543)

Net loss per limited partnership unit        $ (1.88)     $ (1.31)     $ (4.76)     $ (3.99)

                See Accompanying Notes to Financial Statements
</TABLE>

<PAGE>

               CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3

                  STATEMENT OF CHANGES IN PARTNERS' DEFICIT
                                   (Unaudited)
                        (in thousands, except unit data)

<TABLE>
<CAPTION>

                                     Limited
                                    Partnership     General     Limited
                                       Units        Partner     Partners      Total

<S>                                   <C>             <C>       <C>         <C>
Original capital contributions        383,033         $ 1       $ 95,758    $ 95,759

Partners' deficit at
   December 31, 2004                  383,033       $ (998)     $(14,667)   $(15,665)

Net loss for the nine months
   ended September 30, 2005                --           (18)      (1,825)     (1,843)

Partners' deficit at
   September 30, 2005                 383,033       $(1,016)    $(16,492)   $(17,508)

                See Accompanying Notes to Financial Statements
</TABLE>

<PAGE>

               CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3

                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                   Nine Months Ended
                                                                     September 30,
                                                                     2005      2004
Cash flows from operating activities:
<S>                                                               <C>         <C>
  Net loss                                                        $(1,843)    $(1,543)
  Adjustments to reconcile net loss to net cash (used in)
   provided by operating activities:
      Casualty gain                                                    --         (92)
      Depreciation                                                  2,416       2,301
      Amortization of loan costs                                       82          83
      Loss on early extinguishment of debt                             12          --
      Change in accounts:
        Receivables and deposits                                     (238)       (181)
        Other assets                                                  (26)       (266)
        Accounts payable                                               (7)         15
        Tenant security deposit liabilities                            24         (25)
        Accrued property taxes                                        295         296
        Due to affiliates                                            (750)        442
        Other liabilities                                            (189)        (43)
         Net cash (used in) provided by operating activities         (224)        987
Cash flows from investing activities:
  Property improvements and replacements                           (2,701)     (1,101)
  Net deposits to restricted escrows                                 (337)        (26)
  Insurance proceeds received                                          --          92
         Net cash used in investing activities                     (3,038)     (1,035)
Cash flows from financing activities:
  Payment of mortgage notes payable                                  (804)       (740)
  Repayment of mortgage notes payable                              (6,875)         --
  Proceeds from mortgage notes payable                             17,190          --
  Loan costs paid                                                    (237)         --
  Advances from affiliates                                          2,207         599
  Repayment of advances from affiliates                            (3,831)         --
         Net cash provided by (used in) financing activities        7,650        (141)
Net increase (decrease) in cash and cash equivalents                4,388        (189)

Cash and cash equivalents at beginning of period                      490         599

Cash and cash equivalents at end of period                        $ 4,878      $ 410

Supplemental disclosure of cash flow information:
  Cash paid for interest                                          $ 2,708     $ 2,523

Supplemental disclosure of non-cash activity:
  Property improvements and replacements in accounts payable       $ 609       $ 259

Included in property  improvements  and  replacements  for the nine months ended
September 30, 2005 are approximately $54,000 of improvements which were included
in accounts payable at December 31, 2004.

                See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>

               CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

Note A - Basis of Presentation

The  accompanying   unaudited  financial   statements  of  Consolidated  Capital
Institutional   Properties/3  (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 ConCap  Equities,  Inc.  (the "General
Partner"),  which is wholly owned by Apartment Investment and Management Company
("AIMCO"),  a publicly  traded real estate  investment  trust,  all  adjustments
(consisting  of  normal  recurring  accruals)  considered  necessary  for a fair
presentation have been included.  Operating results for the three and nine month
periods ended September 30, 2005, are not necessarily  indicative of the results
that may be expected for the fiscal year ending  December 31, 2005.  For further
information, refer to the financial statements and footnotes thereto included in
the  Partnership's  Annual  Report on Form  10-KSB  for the  fiscal  year  ended
December 31, 2004.

Note B - Transactions with Affiliated Parties

The  Partnership  has no  employees  and depends on the 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 General  Partner  receive 5% of gross receipts from all of the
Partnership's  properties  as  compensation  for providing  property  management
services.  The Partnership  paid to such affiliates  approximately  $452,000 and
$426,000 for the nine months ended  September  30, 2005 and 2004,  respectively,
which is included in operating expense.

Affiliates of the General Partner charged the Partnership for  reimbursement  of
accountable  administrative  expenses  amounting to  approximately  $573,000 and
$460,000 for the nine months ended  September  30, 2005 and 2004,  respectively,
which  is  included  in  general  and  administrative  expenses  and  investment
properties.   The  portion  of  these  reimbursements   included  in  investment
properties  for the  nine  months  ended  September  30,  2005 and 2004 are fees
related to  construction  management  services  provided by an  affiliate of the
General  Partner  of  approximately  $168,000  and  $38,000,  respectively.  The
construction  management  service fees are  calculated  based on a percentage of
additions to investment properties.  At September 30, 2005, approximately $7,000
of these  reimbursement  expenses  are  payable to the  General  Partner and are
included in other liabilities. The outstanding balance of reimbursement expenses
were paid subsequent to September 30, 2005.

During the nine months ended  September 30, 2005, the General  Partner  advanced
the Partnership approximately $2,207,000 to cover expenses related to operations
and capital  improvements at Tamarac Village,  Cedar Rim,  Lamplighter Park, and
Sienna Bay (formerly  known as Sandpiper I and II)  Apartments.  During the nine
months ended  September 30, 2004 the General  Partner  advanced the  Partnership
approximately  $599,000 to cover  expenses  related to  operations at Cedar Rim,
Lamplighter Park, and Tamarac Village  Apartments.  Interest is charged at prime
plus 2% (8.75% at September 30, 2005).  Interest expense on outstanding  advance
balances  was  approximately  $123,000  and $24,000  for the nine  months  ended
September  30,  2005  and  2004,   respectively.   The  Partnership  repaid  the
outstanding advance balance of approximately $3,831,000 plus accrued interest of
approximately  $171,000 during the nine months ended September 30, 2005 from the
proceeds of the refinancing of Williamsburg Manor, Sienna Bay (formerly known as
Sandpiper  I and II)  and  Park  Capitol  Apartments  (see  "Note  C").  No such
repayments were made during the nine months ended September 30, 2004.

The  Partnership  insures 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,   general
liability and vehicle  liability.  The Partnership  insures its properties above
the AIMCO limits  through  insurance  policies  obtained by AIMCO from  insurers
unaffiliated  with the General  Partner.  During the nine months ended September
30,  2005 and 2004,  the  Partnership  was  charged by AIMCO and its  affiliates
approximately  $160,000 and $154,000,  respectively  for insurance  coverage and
fees associated with policy claims administration.

Note C - Refinancing of Mortgage Notes Payable

On  August  31,  2005,  the  Partnership  refinanced  the  mortgage  encumbering
Williamsburg Manor Apartments. The refinancing replaced the existing mortgage of
approximately  $4,150,000 with a new mortgage of approximately  $5,200,000.  The
new mortgage  requires monthly  payments of principal and interest  beginning on
October  10,  2005  until the loan  matures  September  10,  2012,  with a fixed
interest rate of 5.04% and a balloon payment of approximately  $4,577,000 due at
maturity.  Total  capitalized  loan costs  were  approximately  $51,000  and are
included  in  other  assets.   The  Partnership   recognized  a  loss  on  early
extinguishment  of  debt  of  approximately  $3,000  due  to  the  write  off of
unamortized  loan  costs  from the prior  loan  which is  included  in  interest
expense.  The Partnership is prohibited from prepaying the new mortgage prior to
October 10, 2007.  On or after  October 10, 2007 the loan may be repaid with the
payment of a prepayment penalty. In addition, as part of the loan agreement, the
Partnership  was  required to make a deposit of  $500,000  with the lender to be
disbursed after satisfying minimum rental requirements. As a condition to making
the new mortgage  loan, the lender  required AIMCO to guarantee the  obligations
and liabilities of the Partnership with respect to the new mortgage financing.

On August 31,  2005,  the  Partnership  obtained an  additional  mortgage in the
principal amount of $7,050,000 on its investment property, Sienna Bay (formeraly
known as Sandpiper I & II)  Apartments.  The additional  mortgage loan agreement
requires  monthly  payments of interest only beginning on October 10, 2005 until
September 10, 2007,  with the interest  rate being 5.10%.  From October 10, 2007
through  September 10, 2012, the Loan  Agreement  requires  monthly  payments of
principal  and  interest  with a fixed  interest  rate of  5.10%.  The  existing
mortgage note of $3,950,000 was assigned by the existing lender to the holder of
the  additional  mortgage  note.  The terms of the existing  mortgage  note were
modified to match the terms for the additional  mortgage note, and the two loans
were then combined into one mortgage note for $11,000,000.  The mortgage matures
on September 10, 2012 at which time the unpaid principal amount of approximately
$10,115,000  and any interest  accrued but remaining  unpaid  becomes due. Total
capitalized  loan costs were  approximately  $106,000  and are included in other
assets.  The  Partnership  recorded  a loss on early  extinguishment  of debt of
approximately $5,000 due to the write off of unamortized loan costs on the prior
loan which is included in interest  expense.  The Partnership is prohibited from
prepaying  the new mortgage  prior to October 10, 2007.  On or after October 10,
2007 the loan may be repaid  with the  payment  of a  prepayment  penalty.  As a
condition  to  making  the new  mortgage  loan,  the  lender  required  AIMCO to
guarantee the obligations and liabilities of the Partnership with respect to the
new mortgage financing.

On August 30, 2005, the  Partnership  refinanced the mortgage  encumbering  Park
Capitol   Apartments.   The  refinancing   replaced  the  existing  mortgage  of
approximately  $2,975,000 with a new mortgage of approximately  $4,940,000.  The
new mortgage  requires monthly  payments of principal and interest  beginning on
October 1, 2005 until the loan matures  September 1, 2015 with a balloon payment
of approximately  $4,021,000 due at maturity.  The new loan has a fixed interest
rate of 5.02%. Total capitalized loan costs were  approximately  $80,000 and are
included  in  other   assets.   The   Partnership   recorded  a  loss  on  early
extinguishment  of  debt  of  approximately  $4,000  due  to  the  write  off of
unamortized loan costs on the prior loan which is included in interest  expense.
The  Partnership  may prepay the mortgage  without penalty within 90 days of the
maturity date.  However,  if the Partnership  prepays the mortgage loan prior to
June 2, 2015,  a  prepayment  penalty  (as defined in the loan  agreement)  will
apply. As a condition to making the new mortgage loan, the lender required AIMCO
to guarantee the obligations and liabilities of the Partnership  with respect to
the new mortgage financing.

In accordance with the Partnership  Agreement,  the Registrant's General Partner
has evaluated the cash  requirements  of the  Registrant  and determined the net
proceeds from the above transactions will be reserved for repayment of affiliate
loans and advances and for  redevelopment  costs at  Lamplighter  Park,  Tamarac
Village and Sienna Bay (formerly known as Sandpiper I and II) Apartments.

Note D - Casualty Event

In October 2001, a fire occurred at  Lamplighter  Park  Apartments  which caused
damage  to thirty  units of the  complex.  During  the  third  quarter  of 2004,
additional  insurance  proceeds of  approximately  $92,000  were  received.  The
damaged assets were written off in 2002 and 2003 so an additional  casualty gain
of approximately  $92,000 was recognized  during the nine months ended September
30, 2004.

Note E - Contingencies

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 General Partner and several of
their affiliated  partnerships and corporate  entities.  The action purported to
assert  claims on behalf of a class of  limited  partners  and  derivatively  on
behalf of a number of limited partnerships  (including the Partnership) that are
named as nominal defendants, challenging, among other things, the acquisition of
interests in certain General Partner entities by Insignia  Financial Group, Inc.
("Insignia") and entities that 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 sought monetary damages and equitable relief,  including judicial
dissolution of the Partnership. In addition, during the third quarter of 2001, a
complaint captioned Heller v. Insignia Financial Group (the "Heller action") was
filed against the same  defendants  that are named in the Nuanes  action.  On or
about August 6, 2001,  plaintiffs  filed a first amended  complaint.  The Heller
action was brought as a purported  derivative  action,  and asserted claims for,
among other things,  breach of fiduciary duty, unfair  competition,  conversion,
unjust  enrichment,  and judicial  dissolution.  On January 28, 2002,  the trial
court granted  defendants  motion to strike the  complaint.  Plaintiffs  took an
appeal from this order.

On January 8, 2003,  the parties filed a  Stipulation  of Settlement in proposed
settlement of the Nuanes  action and the Heller  action.  On June 13, 2003,  the
court granted final approval of the settlement and entered  judgment in both the
Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an
appeal (the "Appeal")  seeking to vacate and/or reverse the order  approving the
settlement and entering judgment  thereto.  On May 4, 2004, the Objector filed a
second appeal  challenging  the court's use of a referee and its order requiring
Objector to pay those fees.

On March 21, 2005, the Court of Appeals issued opinions in both pending appeals.
With regard to the settlement and judgment entered thereto, the Court of Appeals
vacated  the trial  court's  order and  remanded  to the trial court for further
findings  on the basis that the "state of the record is  insufficient  to permit
meaningful  appellate  review".  With regard to the second appeal,  the Court of
Appeals  reversed the order requiring the Objector to pay referee fees. On April
26, 2005,  the Court of Appeals  lifted the stay of a pending  appeal related to
the Heller action and the trial court's order striking the  complaint.  On April
28, 2005, the Objector  filed a Petition for Review with the California  Supreme
Court in connection with the opinion vacating the order approving settlement and
remanding for further findings.  On June 10, 2005, the California  Supreme Court
denied  Objector's  Petition for Review and the Court of Appeals sent the matter
back to the trial court on June 21,  2005.  The parties  intend to ask the trial
court to make further findings in connection with settlement consistent with the
Court of Appeal's  remand order.  With respect to the related Heller appeal,  on
July 28, 2005,  the Court of Appeals  reversed the trial court's order  striking
the first amended complaint.

On August 18, 2005,  Objector and his counsel filed a motion to  disqualify  the
trial court based on a peremptory challenge and filed a motion to disqualify for
cause on October 17, 2005. On or about October 13, 2005 Objector  filed a motion
to  intervene  and on or about  October  19,  2005  filed  both a motion to take
discovery  relating to the adequacy of plaintiffs as derivative  representatives
and a motion to dissolve the anti-suit injunction in connection with settlement.
On October 27, 2005, the Court denied Objector's peremptory challenge and struck
Objector's motion to disqualify for cause. No hearing has been set on Objector's
remaining motions. On November 3, 2005, Objector and his counsel filed a writ of
mandate to the Court of Appeals challenging the court's October 27, 2005 order.

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

AIMCO Properties L.P. and NHP Management Company, both affiliates of the General
Partner,  are defendants in a lawsuit alleging that they willfully  violated the
Fair Labor Standards Act ("FLSA") by failing to pay maintenance workers overtime
for all hours worked in excess of forty per week.  The  complaint,  filed in the
United States  District Court for the District of Columbia,  attempts to bring a
collective  action  under  the FLSA and seeks to  certify  state  subclasses  in
California, Maryland, and the District of Columbia. Specifically, the plaintiffs
contend  that  AIMCO  Properties  L.P.  and NHP  Management  Company  failed  to
compensate maintenance workers for time that they were required to be "on-call".
Additionally,  the complaint  alleges AIMCO  Properties  L.P. and NHP Management
Company failed to comply with the FLSA in compensating  maintenance  workers for
time  that they  worked in excess of 40 hours in a week.  In June 2005 the Court
conditionally  certified the collective  action on both the on-call and overtime
issues,  which allows the plaintiffs to provide notice of the collective  action
to all non-exempt  maintenance  workers from August 7, 2000 through the present.
Those  employees will have the  opportunity to opt-in to the collective  action,
and AIMCO Properties,  L.P. and NHP Management Company will have the opportunity
to move to decertify the collective action. Because the court denied plaintiffs'
motion to certify state subclasses,  on September 26, 2005, the plaintiffs filed
a class action with the same  allegations  in the Superior  Court of  California
(Contra  Costa  County).  Although the outcome of any  litigation  is uncertain,
AIMCO  Properties,  L.P. does not believe that the ultimate  outcome will have a
material  adverse effect on its consolidated  financial  condition or results of
operations.  Similarly,  the General  Partner does not believe that the ultimate
outcome  will have a  material  adverse  effect on the  Partnership's  financial
condition or results of operations.

The  Partnership  is unaware  of any other  pending  or  outstanding  litigation
matters  involving  it or its  investment  properties  that are not of a routine
nature arising in the ordinary course of business.

Environmental

Various  Federal,  state and local laws subject  property owners or operators to
liability for management,  and the costs of removal or  remediation,  of certain
hazardous  substances  present on a property.  Such laws often impose  liability
without regard to whether the owner or operator knew of, or was responsible for,
the release or presence of the  hazardous  substances.  The  presence of, or the
failure to manage or remedy properly,  hazardous substances may adversely affect
occupancy at affected  apartment  communities and the ability to sell or finance
affected properties.  In addition to the costs associated with investigation and
remediation  actions  brought by government  agencies,  and  potential  fines or
penalties  imposed by such  agencies in  connection  therewith,  the presence of
hazardous  substances on a property could result in claims by private plaintiffs
for personal injury, disease, disability or other infirmities. Various laws also
impose  liability for the cost of removal,  remediation or disposal of hazardous
substances  through a  licensed  disposal  or  treatment  facility.  Anyone  who
arranges for the disposal or treatment of hazardous  substances  is  potentially
liable  under such laws.  These laws often impose  liability  whether or not the
person arranging for the disposal ever owned or operated the disposal  facility.
In connection  with the ownership,  operation and management of its  properties,
the Partnership  could  potentially be liable for  environmental  liabilities or
costs associated with its properties.

Mold

The Partnership is aware of lawsuits  against owners and managers of multifamily
properties asserting claims of personal injury and property damage caused by the
presence of mold, some of which have resulted in substantial  monetary judgments
or settlements. The Partnership has only limited insurance coverage for property
damage loss claims  arising from the  presence of mold and for  personal  injury
claims  related  to  mold  exposure.  Affiliates  of the  General  Partner  have
implemented a national  policy and  procedures to prevent or eliminate mold from
its  properties  and the  General  Partner  believes  that these  measures  will
minimize the effects that mold could have on residents. To date, the Partnership
has not incurred any material  costs or  liabilities  relating to claims of mold
exposure  or to  abate  mold  conditions.  Because  the  law  regarding  mold is
unsettled and subject to change the General  Partner can make no assurance  that
liabilities  resulting  from the presence of or exposure to mold will not have a
material adverse effect on the Partnership's  financial  condition or results of
operations.

SEC Investigation

The  Central  Regional  Office of the  United  States  Securities  and  Exchange
Commission (the "SEC")  continues its formal  investigation  relating to certain
matters.  Although  the staff of the SEC is not limited in the areas that it may
investigate,  AIMCO believes the areas of  investigation  have included  AIMCO's
miscalculated   monthly  net  rental  income  figures  in  third  quarter  2003,
forecasted  guidance,  accounts  payable,  rent  concessions,   vendor  rebates,
capitalization of payroll and certain other costs, tax credit transactions,  and
tender offers for limited  partnership  interests.  AIMCO is cooperating  fully.
AIMCO is not able to predict when the investigation will be resolved. AIMCO does
not believe that the ultimate outcome will have a material adverse effect on its
consolidated  financial  condition  or results  of  operations.  Similarly,  the
General Partner does not believe that the ultimate  outcome will have a material
adverse  effect  on  the  Partnership's   financial   condition  or  results  of
operations.

<PAGE>

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

The matters discussed in this report contain certain forward-looking statements,
including, without limitation, statements regarding future financial performance
and the effect of government  regulations.  Actual results may differ materially
from those described in the forward-looking statements and will be affected by a
variety of risks and factors including,  without limitation:  national and local
economic  conditions;  the terms of  governmental  regulations  that  affect the
Registrant and interpretations of those regulations; the competitive environment
in which the Registrant operates;  financing risks, including the risk that cash
flows from operations may be insufficient to meet required payments of principal
and interest;  real estate risks, including variations of real estate values and
the general  economic  climate in local markets and  competition  for tenants in
such markets;  litigation,  including  costs  associated  with  prosecuting  and
defending  claims  and  any  adverse   outcomes,   and  possible   environmental
liabilities.   Readers  should  carefully  review  the  Registrant's   financial
statements and the notes thereto,  as well as the risk factors  described in the
documents  the  Registrant  files  from  time to time  with the  Securities  and
Exchange Commission.

The Partnership's  investment  properties consist of seven apartment  complexes.
The following table sets forth the average  occupancy of the properties for each
of the nine month periods ended September 30, 2005 and 2004:

                                                   Average Occupancy
      Property                                      2005       2004

      Cedar Rim Apartments (1)                      97%        88%
        New Castle, Washington
      Hidden Cove by the Lake Apartments (3)        85%        93%
        Belleville, Michigan
      Lamplighter Park Apartments (1)               95%        91%
        Bellevue, Washington
      Park Capitol Apartments                       97%        97%
        Salt Lake City, Utah
      Sienna Bay (formerly known as Sandpiper       93%        93%
         I and II) Apartments
        St. Petersburg, Florida
      Tamarac Village Apartments (2)                84%        81%
        Denver, Colorado
      Williamsburg Manor Apartments (4)             87%        94%
        Cary, North Carolina

(1)   The General Partner  attributes the increase in occupancy at Cedar Rim and
      Lamplighter Park Apartments to improved market  conditions in the Seattle,
      Washington area.

(2)   The  General  Partner  attributes  the  increase in  occupancy  at Tamarac
      Village Apartments to increased marketing efforts.

(3)   The General Partner attributes the decrease in occupancy at Hidden Cove by
      the Lake  Apartments  to more  stringent  guidelines  in accepting  tenant
      applications.

(4)   The General  Partner  attributes the decrease in occupancy at Williamsburg
      Manor Apartments to slow market conditions in the local area.

The  Partnership's  financial  results depend upon a number of factors including
the  ability to attract  and  maintain  tenants  at the  investment  properties,
interest  rates on mortgage  loans,  costs  incurred  to operate the  investment
properties,  general  economic  conditions  and weather.  As part of the ongoing
business plan of the Partnership, the 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  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,  the General Partner may use rental  concessions and
rental rate reductions to offset softening market conditions, accordingly, there
is no  guarantee  that the General  Partner will be able to sustain such a plan.
Further,  a number of factors  that are outside  the control of the  Partnership
such as the local  economic  climate  and weather can  adversely  or  positively
affect the Partnership's financial results.

Results of Operations

The Partnership realized a net loss of approximately $728,000 and $1,843,000 for
the three and nine months ended September 30, 2005, respectively,  compared to a
net loss of approximately  $506,000 and $1,543,000 for the three and nine months
ended  September 30, 2004,  respectively.  The increase in net loss for both the
three and nine months  ended  September  30, 2005 is due to an increase in total
expenses partially offset by an increase in total revenues.

Total expenses  increased for both the three and nine months ended September 30,
2005 primarily due to increases in operating, depreciation and interest expenses
partially offset by a decrease in general and administrative expense.  Operating
expense increased for the three months ended September 30, 2005 primarily due to
increases  in  maintenance  and  administrative  expenses.   Operating  expenses
increased  for the  nine  months  ended  September  30,  2005  primarily  due to
increases  in  property,  administrative,  and  maintenance  expenses.  Property
expenses increased for the nine months ended September 30, 2005 primarily due to
increases in utilities at Williamsburg  Manor and Cedar Rim Apartments,  leasing
referral fees and  commissions at  Williamsburg  Manor,  Tamarac  Village,  Park
Capitol and Cedar Rim  Apartments  and salaries and related  benefits at Tamarac
Village,  Park Capitol,  and Cedar Rim Apartments,  partially  offset by reduced
utilities at Tamarac Village Apartments. Maintenance expenses increased for both
the three and nine months ended  September 30, 2005 primarily due to an increase
in contract  services at Sienna Bay, Hidden Cove by the Lake and Tamarac Village
Apartments. Administrative expense increased for the three and nine months ended
September  30, 2005 due to increases in phone sales at Tamarac  Village,  Sienna
Bay and  Hidden  Cove by the  Lake  Apartments  and  temporary  agency  help and
contract  common  area  cleaning  at Tamarac  Village  Apartments.  Depreciation
expense  increased  for the three  and nine  months  ended  September  30,  2005
primarily  due to property  improvements  and  replacements  put into service at
Lamplighter  Park,   Tamarac  Village,   Sienna  Bay,  and  Williamsburg   Manor
Apartments.  Interest  expense  increased  for the three and nine  months  ended
September 30, 2005 primarily due to interest  expense incurred on amounts due to
affiliates and the loss on extinguishment of debt related to the refinancings of
the mortgages at Williamsburg Manor, Sienna Bay, and Park Capitol Apartments.

General and administrative  expenses decreased for both the three and nine month
periods  ended  September  30, 2005  primarily  due to a decrease in the cost of
services included in the management  reimbursements  paid to the General Partner
as allowed  under the  Partnership  Agreement.  Also  included  in  general  and
administrative expenses at both September 30, 2005 and 2004 are costs associated
with the  quarterly and annual  communications  with  investors  and  regulatory
agencies and the annual audit required by the Partnership Agreement.

Total  revenues  increased  for both the  three  and nine  month  periods  ended
September  30, 2005  primarily  due to an increase in rental  income,  partially
offset by a casualty  gain recorded  during the nine months ended  September 30,
2004.  Rental income increased for the three and nine months ended September 30,
2005 due to increases in occupancy at Lamplighter  Park,  Tamarac  Village,  and
Cedar  Rim  Apartments,   increases  in  average  rental  rates  at  Cedar  Rim,
Williamsburg Manor,  Sienna Bay, Park Capitol,  and Lamplighter Park Apartments,
and decreases in bad debt at Sienna Bay, Tamarac Village,  Park Capitol,  Hidden
Cove by the Lake,  Lamplighter Park, and Cedar Rim Apartments,  partially offset
by  decreases in  occupancy  at  Williamsburg  Manor and Hidden Cove by the Lake
Apartments  and decreases in rental rates at Hidden Cove by the Lake and Tamarac
Village Apartments.

In October 2001, a fire occurred at  Lamplighter  Park  Apartments  which caused
damage  to thirty  units of the  complex.  During  the  third  quarter  of 2004,
additional  insurance  proceeds of  approximately  $92,000  were  received.  The
damaged assets were written off in 2002 and 2003 so an additional  casualty gain
of approximately  $92,000 was recognized  during the nine months ended September
30, 2004.

Liquidity and Capital Resources

At  September  30,  2005  the  Partnership  had cash  and  cash  equivalents  of
approximately  $4,878,000  compared to  approximately  $410,000 at September 30,
2004.  Cash  and  cash  equivalents  increased  approximately  $4,388,000  since
December 31, 2004 due to approximately  $7,650,000 of cash provided by financing
activities,  partially offset by  approximately  $224,000 and $3,038,000 of cash
used in operating  and  investing  activities,  respectively.  Cash  provided by
financing activities consisted of advances received from affiliates and proceeds
from  mortgage  notes  payable,  partially  offset by principal  payments on the
mortgages encumbering the Partnership's  properties,  repayment of advances from
affiliates,  repayment of mortgage notes payable and loan costs paid.  Cash used
in investing activities consisted of property  improvements and replacements and
deposits  to  restricted  escrows  maintained  by  the  mortgage  lenders.   The
Partnership invests its working capital reserves in interest bearing accounts.

On  August  31,  2005,  the  Partnership  refinanced  the  mortgage  encumbering
Williamsburg Manor Apartments. The refinancing replaced the existing mortgage of
approximately  $4,150,000 with a new mortgage of approximately  $5,200,000.  The
new mortgage  requires monthly  payments of principal and interest  beginning on
October  10,  2005  until the loan  matures  September  10,  2012,  with a fixed
interest rate of 5.04% and a balloon payment of approximately  $4,577,000 due at
maturity.  Total  capitalized  loan costs  were  approximately  $51,000  and are
included  in  other  assets.   The  Partnership   recognized  a  loss  on  early
extinguishment  of  debt  of  approximately  $3,000  due  to  the  write  off of
unamortized  loan  costs  from the prior  loan  which is  included  in  interest
expense.  The Partnership is prohibited from prepaying the new mortgage prior to
October 10, 2007.  On or after  October 10, 2007 the loan may be repaid with the
payment of a prepayment penalty. As a condition to making the new mortgage loan,
the lender  required AIMCO to guarantee the  obligations  and liabilities of the
Partnership with respect to the new mortgage financing.

On August 31,  2005,  the  Partnership  obtained an  additional  mortgage in the
principal  amount  of  $7,050,000  on  its  investment   property,   Sienna  Bay
Apartments.  The additional mortgage loan agreement requires monthly payments of
interest only beginning on October 10, 2005 until  September 10, 2007,  with the
interest rate being 5.10%. From October 10, 2007 through September 10, 2012, the
Loan Agreement  requires monthly payments of principal and interest with a fixed
interest rate of 5.10%. The existing mortgage note of $3,950,000 was assigned by
the existing lender to the holder of the additional  mortgage note. The terms of
the existing  mortgage note were modified to match the terms for the  additional
mortgage  note,  and the two loans were then combined into one mortgage note for
$11,000,000. The mortgage matures on September 10, 2012 at which time the unpaid
principal  amount of  approximately  $10,115,000  and any  interest  accrued but
remaining unpaid becomes due. Total  capitalized  loan costs were  approximately
$106,000 and are included in other assets.  The  Partnership  recorded a loss on
early  extinguishment  of debt of  approximately  $5,000 due to the write off of
unamortized loan costs on the prior loan which is included in interest  expense.
The  Partnership is prohibited  from prepaying the new mortgage prior to October
10, 2007.  On or after  October 10, 2007 the loan may be repaid with the payment
of a prepayment  penalty.  As a condition to making the new mortgage  loan,  the
lender  required  AIMCO to guarantee  the  obligations  and  liabilities  of the
Partnership with respect to the new mortgage financing.

On August 30, 2005, the  Partnership  refinanced the mortgage  encumbering  Park
Capitol   Apartments.   The  refinancing   replaced  the  existing  mortgage  of
approximately  $2,975,000 with a new mortgage of approximately  $4,940,000.  The
new mortgage  requires monthly  payments of principal and interest  beginning on
October 1, 2005 until the loan matures  September 1, 2015 with a balloon payment
of approximately  $4,021,000 due at maturity.  The new loan has a fixed interest
rate of 5.02%. Total capitalized loan costs were  approximately  $80,000 and are
included  in  other   assets.   The   Partnership   recorded  a  loss  on  early
extinguishment  of  debt  of  approximately  $4,000  due  to  the  write  off of
unamortized loan costs on the prior loan which is included in interest  expense.
The  Partnership  may prepay the mortgage  without penalty within 90 days of the
maturity date.  However,  if the Partnership  prepays the mortgage loan prior to
June 2, 2015,  a  prepayment  penalty  (as defined in the loan  agreement)  will
apply. As a condition to making the new mortgage loan, the lender required AIMCO
to guarantee the obligations and liabilities of the Partnership  with respect to
the new mortgage financing.

In accordance with the Partnership  Agreement,  the Registrant's General Partner
has evaluated the cash  requirements  of the  Registrant  and determined the net
proceeds from the above transactions will be reserved for repayment of affiliate
loans and advances and for  redevelopment  costs at  Lamplighter  Park,  Tamarac
Village and Sandpiper I and II Apartments.

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  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. The General Partner monitors
developments in the area of legal and regulatory  compliance.  For example,  the
Sarbanes-Oxley Act of 2002 mandates or suggests  additional  compliance measures
with regard to governance,  disclosure, audit and other areas. In light of these
changes,  the Partnership  expects that it will incur higher expenses related to
compliance.   Capital   improvements  planned  for  each  of  the  Partnership's
properties are detailed below.

Cedar Rim Apartments

During the nine months ended  September  30,  2005,  the  Partnership  completed
approximately   $117,000  of  capital  improvements  at  Cedar  Rim  Apartments,
consisting primarily of floor covering and appliance replacements and structural
improvements.  These improvements were funded from the property's operating cash
flow. The Partnership  regularly  evaluates the capital improvement needs of the
property.  While  the  Partnership  has no  material  commitments  for  property
improvements  and  replacements,   certain  routine  capital   expenditures  are
anticipated  during 2005. Such capital  expenditures will depend on the physical
condition  of the  property as well as  anticipated  cash flow  generated by the
property.

Hidden Cove by the Lake Apartments

During the nine months ended  September  30,  2005,  the  Partnership  completed
approximately  $167,000  of  capital  improvements  at  Hidden  Cove by the Lake
Apartments,  consisting  primarily  of floor  covering  and  roof  replacements,
interior  decoration and waterproofing.  These improvements were funded from the
property's operating cash flow. The Partnership  regularly evaluates the capital
improvement  needs  of the  property.  While  the  Partnership  has no  material
commitments for property improvements and replacements,  certain routine capital
expenditures are anticipated during 2005. Such capital  expenditures will depend
on the  physical  condition  of the  property as well as  anticipated  cash flow
generated by the property.

Lamplighter Park Apartments

During the nine months ended  September  30,  2005,  the  Partnership  completed
approximately  $151,000 of capital  improvements at Lamplighter Park Apartments,
consisting  primarily of floor covering and exterior door replacements,  heating
and appliance upgrades, and dumpster enclosures. In addition the Partnership has
committed to a phased redevelopment project at Lamplighter Park Apartments which
includes kitchen upgrades and other interior and exterior unit improvements.  It
is  estimated  that  the  costs   associated   with  this   renovation  will  be
approximately  $2.2  million.  Approximately  $328,000 has been spent as part of
this project during the nine months ended September 30, 2005. The  redevelopment
project is scheduled to be completed  during 2007. The improvements to date have
been funded from the property's  operating cash flow,  advances from the General
Partner and refinance proceeds (see discussion above). The Partnership regularly
evaluates  the  capital  improvement  needs  of the  property.  Other  than  the
redevelopment  project the Partnership has no material  commitments for property
improvements  and  replacements,  but certain routine capital  expenditures  are
anticipated  during 2005. Such capital  expenditures will depend on the physical
condition  of the  property as well as  anticipated  cash flow  generated by the
property.

Park Capitol Apartments

During the nine months ended  September  30,  2005,  the  Partnership  completed
approximately  $204,000  of capital  improvements  at Park  Capitol  Apartments,
consisting   primarily  of  floor  covering  and  exterior  door   replacements,
structural improvements,  fencing,  swimming pool decking replacement,  and roof
replacement.  These improvements were funded from the property's  operating cash
flow. The Partnership  regularly  evaluates the capital improvement needs of the
property.  While  the  Partnership  has no  material  commitments  for  property
improvements  and  replacements,   certain  routine  capital   expenditures  are
anticipated  during 2005. Such capital  expenditures will depend on the physical
condition  of the  property as well as  anticipated  cash flow  generated by the
property.

Tamarac Village Apartments

During the nine months ended  September  30,  2005,  the  Partnership  completed
approximately  $795,000 of capital  improvements at Tamarac Village  Apartments,
consisting  primarily  of  floor  covering,  door,  air  conditioning  unit  and
appliance replacements, water heater and fire safety upgrades, signage, swimming
pool, plumbing and lighting upgrades and tennis court improvements.  In addition
the  Partnership  has  committed  to a phased  redevelopment  project at Tamarac
Village  Apartments  which  includes  kitchen and other  interior unit upgrades,
exterior  painting and wood repairs.  It is estimated that the costs  associated
with this renovation will be approximately $4.1 million.  Approximately $273,000
has been spent as part of this project  during the nine months  ended  September
30, 2005. The  redevelopment  project is scheduled to be completed  during 2007.
The  improvements  to date have been funded from the  property's  operating cash
flow,  advances from the General Partner and refinance  proceeds (see discussion
above). The Partnership regularly evaluates the capital improvement needs of the
property.  Other than the redevelopment  project the Partnership has no material
commitments  for property  improvements  and  replacements,  but certain routine
capital expenditures are anticipated during 2005. Such capital expenditures will
depend on the physical  condition of the  property as well as  anticipated  cash
flow generated by the property.

Williamsburg Manor Apartments

During the nine months ended  September  30,  2005,  the  Partnership  completed
approximately $154,000 of capital improvements at Williamsburg Manor Apartments,
consisting  primarily of floor  covering and  appliance  replacements,  interior
lighting upgrades, drapes and mini-blind replacements,  structural upgrades, and
swimming pool  improvements.  These improvements were funded from the property's
replacement  reserves  and  operating  cash  flow.  The  Partnership   regularly
evaluates the capital  improvement needs of the property.  While the Partnership
has no material commitments for property improvements and replacements,  certain
routine  capital   expenditures  are  anticipated   during  2005.  Such  capital
expenditures  will depend on the  physical  condition of the property as well as
replacement reserves and anticipated cash flow generated by the property.

Sienna Bay Apartments

During the nine months ended  September  30,  2005,  the  Partnership  completed
approximately   $408,000  of  capital  improvements  at  Sienna  Bay  Apartments
consisting primarily of floor covering replacements, structural improvements and
air conditioning  unit and cabinet  replacements and stair repairs.  In addition
the Partnership has committed to a substantial  redevelopment  project at Sienna
Bay  Apartments  which  includes  site  improvements,  signage and  interior and
exterior  upgrades.  It is estimated that the total costs  associated  with this
renovation will be approximately $5.2 million.  Approximately  $659,000 has been
spent as part of this project  during the nine months ended  September 30, 2005,
including  approximately  $18,000 of capitalized  construction  period  interest
costs and  approximately  $3,000 and $2,000 of  capitalized  property  taxes and
operating expenses,  respectively.  The redevelopment project is scheduled to be
completed during the second quarter of 2007. These improvements were funded from
the property's  operating  cash flow,  replacement  reserves,  advances from the
General Partner and refinance  proceeds (see discussion  above). The Partnership
regularly  evaluates the capital  improvement needs of the property.  Other than
the  redevelopment  project  the  Partnership  has no material  commitments  for
property improvements and replacements, but certain routine capital expenditures
are  anticipated  during  2005.  Such  capital  expenditures  will depend on the
physical  condition  of  the  property  as  well  as  replacement  reserves  and
anticipated cash flow generated by the property.

Capital  expenditures will be incurred only if cash is available from operations
or from  Partnership  reserves.  To the extent  that  capital  improvements  are
required,  the Partnership's  distributable  cash flow, if any, may be adversely
affected at least in the short term.

The  Partnership's  assets are  thought to be  sufficient  for  near-term  needs
(exclusive  of  capital   improvements)   of  the   Partnership.   The  mortgage
indebtedness   encumbering  the   Partnership's   properties  of   approximately
$54,100,000  has maturity dates ranging from September 2012 to October 2021. The
mortgage  indebtedness  encumbering  Tamarac  Village,  Hidden Cove by the Lake,
Lamplighter Park and Cedar Rim Apartments of approximately  $32,966,000 requires
monthly  payments  until the loans mature  between July 2021 and October 2021 at
which  time  the  loans  are  scheduled  to be  fully  amortized.  The  mortgage
indebtedness  encumbering  Williamsburg  Manor,  Sienna  Bay,  and Park  Capitol
Apartments of  approximately  $21,134,000  requires  monthly  payments until the
loans  mature  between  September  2012 and  September  2015  and has a  balloon
payments totaling approximately $18,713,000 due at maturity. The General Partner
will attempt to refinance such indebtedness  and/or sell the properties prior to
such maturity dates. If the investment  properties  cannot be refinanced or sold
for a sufficient amount, the Partnership may risk losing such properties through
foreclosure.

The Partnership made no distributions during the nine months ended September 30,
2005 and 2004.  Future  cash  distributions  will  depend on the  levels of cash
generated from  operations,  and the timing of debt  maturities,  property sales
and/or  refinancings.  The  Partnership's  cash  available for  distribution  is
reviewed on a monthly  basis.  Given the  redevelopment  projects at Sienna Bay,
Tamarac Village and  Lamplighter  Park  Apartments,  it is not expected that the
Partnership  will generate  sufficient  funds from  operations,  after  required
capital  expenditures,  to permit any  distributions  to its partners in 2005 or
subsequent periods.

Other

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership,  AIMCO and its affiliates owned 236,213.4 limited partnership units
(the "Units") in the Partnership representing 61.67% of the outstanding Units at
September  30,  2005. 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 in exchange for cash or a combination
of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO,
either through private  purchases or tender offers.  Pursuant to the Partnership
Agreement,  unitholders  holding a majority  of the Units are  entitled  to take
action with  respect to a variety of matters that  include,  but are not limited
to,  voting on certain  amendments  to the  Partnership  Agreement and voting to
remove  the  General  Partner.  As a result  of its  ownership  of 61.67% of the
outstanding  Units,  AIMCO and its  affiliates  are in a position to control all
such voting  decisions  with  respect to the  Partnership.  Although the General
Partner owes fiduciary duties to the limited  partners of the  Partnership,  the
General Partner also owes fiduciary duties to AIMCO as its sole stockholder.  As
a  result,  the  duties of the  General  Partner,  as  general  partner,  to the
Partnership  and its limited  partners may come into conflict with the duties of
the General Partner to AIMCO as its sole stockholder.

Critical Accounting Policies and Estimates

The 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, but are not limited
to, changes in 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  impairment of the  Partnership's
assets.

Revenue Recognition

The Partnership generally leases apartment units for twelve-month terms or less.
The Partnership will offer rental concessions during particularly slow months or
in response  to heavy  competition  from other  similar  complexes  in the area.
Rental income attributable to leases, net of any concessions, is recognized on a
straight-line  basis over the term of the lease.  The Partnership  evaluates all
accounts  receivable  from  residents and  establishes  an allowance,  after the
application of security deposits,  for accounts greater than 30 days past due on
current tenants and all receivables due from former tenants.

Item 3.     Controls and Procedures

(a) Disclosure Controls and Procedures.  The Partnership's management,  with the
participation of the principal executive officer and principal financial officer
of the General Partner,  who are the equivalent of the  Partnership's  principal
executive officer and principal financial officer,  respectively,  has evaluated
the  effectiveness of the Partnership's  disclosure  controls and procedures (as
such term is defined  in Rules  13a-15(e)  and  15d-15(e)  under the  Securities
Exchange  Act of 1934,  as amended  (the  "Exchange  Act")) as of the end of the
period covered by this report. Based on such evaluation, the principal executive
officer and  principal  financial  officer of the General  Partner,  who are the
equivalent  of the  Partnership's  principal  executive  officer  and  principal
financial  officer,  respectively,  have  concluded  that, as of the end of such
period, the Partnership's disclosure controls and procedures are effective.

(b) Internal Control Over Financial  Reporting.  There have not been any changes
in the Partnership's  internal control over financial reporting (as such term is
defined in Rules  13a-15(f)  and  15d-15(f)  under the Exchange  Act) during the
fiscal quarter to which this report relates that have  materially  affected,  or
are reasonably likely to materially affect,  the Partnership's  internal control
over financial reporting.

<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 General Partner and several of
their affiliated  partnerships and corporate  entities.  The action purported to
assert  claims on behalf of a class of  limited  partners  and  derivatively  on
behalf of a number of limited partnerships  (including the Partnership) that are
named as nominal defendants, challenging, among other things, the acquisition of
interests in certain General Partner entities by Insignia  Financial Group, Inc.
("Insignia") and entities that 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 sought monetary damages and equitable relief,  including judicial
dissolution of the Partnership. In addition, during the third quarter of 2001, a
complaint captioned Heller v. Insignia Financial Group (the "Heller action") was
filed against the same  defendants  that are named in the Nuanes  action.  On or
about August 6, 2001,  plaintiffs  filed a first amended  complaint.  The Heller
action was brought as a purported  derivative  action,  and asserted claims for,
among other things,  breach of fiduciary duty, unfair  competition,  conversion,
unjust  enrichment,  and judicial  dissolution.  On January 28, 2002,  the trial
court granted  defendants  motion to strike the  complaint.  Plaintiffs  took an
appeal from this order.

On January 8, 2003,  the parties filed a  Stipulation  of Settlement in proposed
settlement of the Nuanes  action and the Heller  action.  On June 13, 2003,  the
court granted final approval of the settlement and entered  judgment in both the
Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an
appeal (the "Appeal")  seeking to vacate and/or reverse the order  approving the
settlement and entering judgment  thereto.  On May 4, 2004, the Objector filed a
second appeal  challenging  the court's use of a referee and its order requiring
Objector to pay those fees.

On March 21, 2005, the Court of Appeals issued opinions in both pending appeals.
With regard to the settlement and judgment entered thereto, the Court of Appeals
vacated  the trial  court's  order and  remanded  to the trial court for further
findings  on the basis that the "state of the record is  insufficient  to permit
meaningful  appellate  review".  With regard to the second appeal,  the Court of
Appeals  reversed the order requiring the Objector to pay referee fees. On April
26, 2005,  the Court of Appeals  lifted the stay of a pending  appeal related to
the Heller action and the trial court's order striking the  complaint.  On April
28, 2005, the Objector  filed a Petition for Review with the California  Supreme
Court in connection with the opinion vacating the order approving settlement and
remanding for further findings.  On June 10, 2005, the California  Supreme Court
denied  Objector's  Petition for Review and the Court of Appeals sent the matter
back to the trial court on June 21,  2005.  The parties  intend to ask the trial
court to make further findings in connection with settlement consistent with the
Court of Appeal's  remand order.  With respect to the related Heller appeal,  on
July 28, 2005,  the Court of Appeals  reversed the trial court's order  striking
the first amended complaint.

On August 18, 2005,  Objector and his counsel filed a motion to  disqualify  the
trial court based on a peremptory challenge and filed a motion to disqualify for
cause on October 17, 2005. On or about October 13, 2005 Objector  filed a motion
to  intervene  and on or about  October  19,  2005  filed  both a motion to take
discovery  relating to the adequacy of plaintiffs as derivative  representatives
and a motion to dissolve the anti-suit injunction in connection with settlement.
On October 27, 2005, the Court denied Objector's peremptory challenge and struck
Objector's motion to disqualify for cause. No hearing has been set on Objector's
remaining motions. On November 3, 2005, Objector and his counsel filed a writ of
mandate to the Court of Appeals challenging the court's October 27, 2005 order.

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

AIMCO Properties L.P. and NHP Management Company, both affiliates of the General
Partner,  are defendants in a lawsuit alleging that they willfully  violated the
Fair Labor Standards Act ("FLSA") by failing to pay maintenance workers overtime
for all hours worked in excess of forty per week.  The  complaint,  filed in the
United States  District Court for the District of Columbia,  attempts to bring a
collective  action  under  the FLSA and seeks to  certify  state  subclasses  in
California, Maryland, and the District of Columbia. Specifically, the plaintiffs
contend  that  AIMCO  Properties  L.P.  and NHP  Management  Company  failed  to
compensate maintenance workers for time that they were required to be "on-call".
Additionally,  the complaint  alleges AIMCO  Properties  L.P. and NHP Management
Company failed to comply with the FLSA in compensating  maintenance  workers for
time  that they  worked in excess of 40 hours in a week.  In June 2005 the Court
conditionally  certified the collective  action on both the on-call and overtime
issues,  which allows the plaintiffs to provide notice of the collective  action
to all non-exempt  maintenance  workers from August 7, 2000 through the present.
Those  employees will have the  opportunity to opt-in to the collective  action,
and AIMCO Properties,  L.P. and NHP Management Company will have the opportunity
to move to decertify the collective action. Because the court denied plaintiffs'
motion to certify state subclasses,  on September 26, 2005, the plaintiffs filed
a class action with the same  allegations  in the Superior  Court of  California
(Contra  Costa  County).  Although the outcome of any  litigation  is uncertain,
AIMCO  Properties,  L.P. does not believe that the ultimate  outcome will have a
material  adverse effect on its consolidated  financial  condition or results of
operations.  Similarly,  the General  Partner does not believe that the ultimate
outcome  will have a  material  adverse  effect on the  Partnership's  financial
condition or results of operations.

Item 5.     Other Information

            None.

Item 6.     Exhibits

            See Exhibit Index Attached.


<PAGE>


                                   SIGNATURES



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

                                    CONSOLIDATED CAPITAL INSTITUTIONAL
                                    PROPERTIES/3

                                    By:   CONCAP EQUITIES, INC.
                                          Its General Partner

                                    By:   /s/Martha L. Long
                                          Martha L. Long
                                          Senior Vice President

                                    By:   /s/Stephen B. Waters
                                          Stephen B. Waters
                                          Vice President

                                    Date: November 14, 2005

<PAGE>

               CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3

                                  EXHIBIT INDEX


 Exhibit Number   Description of Exhibit


       3.1        Certificate  of  Limited  Partnership,   as  amended  to  date
                  (Exhibit 3 to the Registrant's  Annual Report on Form 10-K for
                  the year ended  December 31, 2002, is  incorporated  herein by
                  reference).

      10.48       Multifamily   Note  dated  June  27,  2001,   by  and  between
                  Consolidated Capital Institutional Properties/3,  a California
                  limited partnership, and GMAC Commercial Mortgage Corporation,
                  related  to  Tamarac  Village  Apartments.   (Incorporated  by
                  reference  to the  Quarterly  Report  on Form  10-QSB  for the
                  quarter ended June 30, 2001.)

      10.49       Multifamily   Note  dated  June  29,  2001,   by  and  between
                  Consolidated Capital Institutional Properties/3,  a California
                  limited partnership, and GMAC Commercial Mortgage Corporation,
                  related  to  Lamplighter  Park  Apartments.  (Incorporated  by
                  reference  to the  Quarterly  Report  on Form  10-QSB  for the
                  quarter ended June 30, 2001.)

      10.50       Multifamily   Note  dated  July  23,  2001,   by  and  between
                  Consolidated Capital Institutional Properties/3,  a California
                  limited partnership, and GMAC Commercial Mortgage Corporation,
                  related to Cedar Rim Apartments. (Incorporated by reference to
                  the Quarterly Report on Form 10-QSB for the quarter ended June
                  30, 2001.)

      10.51       Multifamily  Note dated  September  19,  2001,  by and between
                  Consolidated Capital Institutional Properties/3,  a California
                  limited partnership, and GMAC Commercial Mortgage Corporation,
                  related to Hidden Cove Apartments.  (Incorporated by reference
                  to the  Quarterly  Report on Form 10-QSB for the quarter ended
                  September 30, 2001.)

      10.52       Deed of Trust,  Assignment  of Leases  and Rents and  Security
                  Agreement  dated  August 31, 2005 between  AIMCO  Williamsburg
                  Manor,  LLC, a Delaware limited liability company and New York
                  Life   Insurance   Company  filed  as  Exhibit  10.52  to  the
                  Registrant's  Current Report on Form 8-K dated August 31, 2005
                  and  filed  on  September  7,  2005,  incorporated  herein  by
                  reference.

      10.53       Promissory   Note  dated   August  31,  2005   between   AIMCO
                  Williamsburg  Manor, LLC, a Delaware limited liability company
                  and New York Life Insurance  Company filed as Exhibit 10.53 to
                  the  Registrant's  Current Report on Form 8-K dated August 31,
                  2005 and filed on  September 7, 2005,  incorporated  herein by
                  reference.

      10.54       Guaranty dated August 31, 2005 between AIMCO Properties, L.P.,
                  for the benefit of New York Life  Insurance  Company  filed as
                  Exhibit 10.54 to the  Registrant's  Current Report on Form 8-K
                  dated  August  31,  2005  and  filed  on  September  7,  2005,
                  incorporated herein by reference.

      10.55       Additional  Mortgage  Note dated August 31, 2005 between AIMCO
                  Sandpiper,  LLC, a Delaware limited  liability company and New
                  York Life  Insurance  Company  filed as  Exhibit  10.55 to the
                  Registrant's  Current Report on Form 8-K dated August 31, 2005
                  and  filed  on  September  7,  2005,  incorporated  herein  by
                  reference.

      10.56       Modification,  Reinstatement  and Consolidation of Notes dated
                  August  31,  2005  between  AIMCO  Sandpiper,  LLC, a Delaware
                  limited  liability company and New York Life Insurance Company
                  filed as Exhibit 10.56 to the  Registrant's  Current Report on
                  Form 8-K dated August 31, 2005 and filed on September 7, 2005,
                  incorporated herein by reference.

      10.57       Mortgage,   Assignment   of  Leases  and  Rents  and  Security
                  Agreement dated August 31, 2005 between AIMCO Sandpiper,  LLC,
                  a  Delaware  limited  liability  company  and  New  York  Life
                  Insurance  Company filed as Exhibit 10.57 to the  Registrant's
                  Current  Report on Form 8-K dated August 31, 2005 and filed on
                  September 7, 2005, incorporated herein by reference.

      10.58       Guaranty dated August 31, 2005 between AIMCO Properties,  L.P.
                  for the benefit of New York Life  Insurance  Company  filed as
                  Exhibit 10.58 to the  Registrant's  Current Report on Form 8-K
                  dated  August  31,  2005  and  filed  on  September  7,  2005,
                  incorporated herein by reference.

      10.59       Deed of Trust,  Security  Agreement  and Fixture  Filing dated
                  August 30, 2005  between  Consolidated  Capital  Institutional
                  Properties/3,    a   California   limited    partnership   and
                  Transamerica  Occidental  Life Insurance  Company,  related to
                  Park Capitol Apartments.

      10.60       Secured   Promissory   Note  dated  August  30,  2005  between
                  Consolidated Capital Institutional Properties/3,  a California
                  limited partnership and Transamerica Occidental Life Insurance
                  Company, related to Park Capitol Apartments.

      28.1        Fee Owner's General Partnership  Agreement  (Incorporated by
                  reference to  Registration  Statement of  Partnership  (File
                  No. 2-97664) filed July 23, 1985).

      28.2        Fee Owner's  Certificate  of  Partnership  (Incorporated  by
                  reference to  Registration  Statement of  Partnership  (File
                  No. 2-97664) filed July 23, 1985).

      31.1        Certification  of  equivalent  of  Chief  Executive  Officer
                  pursuant     to     Securities     Exchange     Act    Rules
                  13a-14(a)/15d-14(a),  as Adopted  Pursuant to Section 302 of
                  the Sarbanes-Oxley Act of 2002.

      31.2        Certification  of  equivalent  of  Chief  Financial  Officer
                  pursuant     to     Securities     Exchange     Act    Rules
                  13a-14(a)/15d-14(a),  as Adopted  Pursuant to Section 302 of
                  the Sarbanes-Oxley Act of 2002.

      32.1        Certification of the equivalent of the Chief Executive Officer
                  and Chief  Financial  Officer  Pursuant  to 18 U.S.C.  Section
                  1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002.



<PAGE>



Exhibit 31.1


                                  CERTIFICATION


I, Martha L. Long, certify that:


1.    I have  reviewed  this  quarterly  report on Form  10-QSB of  Consolidated
      Capital Institutional Properties/3;

2.    Based on my knowledge,  this report does not contain any untrue  statement
      of a material fact or omit to state a material fact  necessary to make the
      statements made, in light of the circumstances under which such statements
      were made,  not  misleading  with  respect  to the period  covered by this
      report;

3.    Based on my  knowledge,  the  financial  statements,  and other  financial
      information  included  in this  report,  fairly  present  in all  material
      respects the financial condition,  results of operations and cash flows of
      the small  business  issuer as of, and for, the periods  presented in this
      report;

4.    The  small  business  issuer's  other  certifying  officer(s)  and  I  are
      responsible  for  establishing  and  maintaining  disclosure  controls and
      procedures (as defined in Exchange Act Rules  13a-15(e) and 15d-15(e)) for
      the small business issuer and have:

      (a)   Designed such  disclosure  controls and  procedures,  or caused such
            disclosure   controls  and  procedures  to  be  designed  under  our
            supervision,  to ensure that  material  information  relating to the
            small business issuer, including its consolidated  subsidiaries,  is
            made  known to us by  others  within  those  entities,  particularly
            during the period in which this report is being prepared;

      (b)   Evaluated  the   effectiveness   of  the  small  business   issuer's
            disclosure  controls and procedures and presented in this report our
            conclusions about the  effectiveness of the disclosure  controls and
            procedures, as of the end of the period covered by this report based
            on such evaluation; and

      (c)   Disclosed in this report any change in the small  business  issuer's
            internal  control over financial  reporting that occurred during the
            small  business  issuer's  most  recent  fiscal  quarter  (the small
            business  issuer's  fourth  fiscal  quarter in the case of an annual
            report) that has  materially  affected,  or is reasonably  likely to
            materially affect, the small business issuer's internal control over
            financial reporting; and

5.    The  small  business  issuer's  other  certifying  officer(s)  and I  have
      disclosed,  based on our most recent  evaluation of internal  control over
      financial reporting, to the small business issuer's auditors and the audit
      committee of the small  business  issuer's  board of directors (or persons
      performing the equivalent functions):

      (a)   All significant  deficiencies and material  weaknesses in the design
            or operation of internal control over financial  reporting which are
            reasonably  likely to adversely  affect the small business  issuer's
            ability  to  record,   process,   summarize  and  report   financial
            information; and

      (b)   Any fraud,  whether or not  material,  that  involves  management or
            other  employees who have a significant  role in the small  business
            issuer's internal control over financial reporting.

Date:  November 14, 2005

                                    /s/Martha L. Long
                                    Martha L. Long
                                    Senior Vice President of ConCap
                                    Equities, Inc., equivalent of the
                                    chief executive officer of the
                                    Partnership


<PAGE>



Exhibit 31.2


                                  CERTIFICATION


I, Stephen B. Waters, certify that:


1.    I have  reviewed  this  quarterly  report on Form  10-QSB of  Consolidated
      Capital Institutional Properties/3;

2.    Based on my knowledge,  this report does not contain any untrue  statement
      of a material fact or omit to state a material fact  necessary to make the
      statements made, in light of the circumstances under which such statements
      were made,  not  misleading  with  respect  to the period  covered by this
      report;

3.    Based on my  knowledge,  the  financial  statements,  and other  financial
      information  included  in this  report,  fairly  present  in all  material
      respects the financial condition,  results of operations and cash flows of
      the small  business  issuer as of, and for, the periods  presented in this
      report;

4.    The  small  business  issuer's  other  certifying  officer(s)  and  I  are
      responsible  for  establishing  and  maintaining  disclosure  controls and
      procedures (as defined in Exchange Act Rules  13a-15(e) and 15d-15(e)) for
      the small business issuer and have:

      (a)   Designed such  disclosure  controls and  procedures,  or caused such
            disclosure   controls  and  procedures  to  be  designed  under  our
            supervision,  to ensure that  material  information  relating to the
            small business issuer, including its consolidated  subsidiaries,  is
            made  known to us by  others  within  those  entities,  particularly
            during the period in which this report is being prepared;

      (b)   Evaluated  the   effectiveness   of  the  small  business   issuer's
            disclosure  controls and procedures and presented in this report our
            conclusions about the  effectiveness of the disclosure  controls and
            procedures, as of the end of the period covered by this report based
            on such evaluation; and

      (c)   Disclosed in this report any change in the small  business  issuer's
            internal  control over financial  reporting that occurred during the
            small  business  issuer's  most  recent  fiscal  quarter  (the small
            business  issuer's  fourth  fiscal  quarter in the case of an annual
            report) that has  materially  affected,  or is reasonably  likely to
            materially affect, the small business issuer's internal control over
            financial reporting; and

5.    The  small  business  issuer's  other  certifying  officer(s)  and I  have
      disclosed,  based on our most recent  evaluation of internal  control over
      financial reporting, to the small business issuer's auditors and the audit
      committee of the small  business  issuer's  board of directors (or persons
      performing the equivalent functions):

      (a)   All significant  deficiencies and material  weaknesses in the design
            or operation of internal control over financial  reporting which are
            reasonably  likely to adversely  affect the small business  issuer's
            ability  to  record,   process,   summarize  and  report   financial
            information; and

      (b)   Any fraud,  whether or not  material,  that  involves  management or
            other  employees who have a significant  role in the small  business
            issuer's internal control over financial reporting.

Date:  November 14, 2005

                                    /s/Stephen B. Waters
                                    Stephen B. Waters
                                    Vice President of ConCap Equities,
                                    Inc., equivalent of the chief
                                    financial officer of the Partnership


<PAGE>



Exhibit 32.1


                          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 Consolidated  Capital
Institutional  Properties/3 (the "Partnership"),  for the quarterly period ended
September 30, 2005 as filed with the Securities  and Exchange  Commission on the
date hereof  (the  "Report"),  Martha L. Long,  as the  equivalent  of the Chief
Executive  Officer of the Partnership,  and Stephen B. Waters, 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/Martha L. Long
                                    Name:  Martha L. Long
                                    Date:  November 14, 2005


                                           /s/Stephen B. Waters
                                    Name:  Stephen B. Waters
                                    Date:  November 14, 2005


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

<PAGE>
                                                                   Exhibit 10.59

  Prepared by, and after recording return to:

  David H. Rockwell
  Stoel Rives LLP
  600 University Street, Suite 3600
  Seattle, Washington 98101




<PAGE>


                    DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE
                                     FILING


                   CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3,
                        a California limited partnership
                                    Borrower,

                               having an office at
                          4582 South Ulster St. Parkway
                             Denver, Colorado 80237

                                       to

                            BONNEVILLE TITLE COMPANY,
                                     Trustee

                               for the benefit of
                   TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY,
                              an Iowa corporation,
                                     Lender,

                                having an office
                       c/o AEGON USA Realty Advisors, Inc.
                            4333 Edgewood Road, N.E.
                          Cedar Rapids, Iowa 52499-5443

                             Loan Amount: $4,940,000
   Premises: 215 North Main Street, Salt Lake County, Salt Lake City, Utah 84103


<PAGE>


Loan No. 89540

                Deed of Trust, Security Agreement and Fixture Filing


                            (Salt Lake County, Utah)


This Deed of Trust, Security Agreement and Fixture Filing (this "Deed of Trust")
is made and given as of the 30th day of August,  2005, by  CONSOLIDATED  CAPITAL
INSTITUTIONAL PROPERTIES/3,  a California limited partnership, as trustor, whose
address  is  4582  South  Ulster  St.  Parkway,   Denver,  Colorado  80237  (the
"Borrower"),  to BONNEVILLE TITLE COMPANY, as trustee,  whose address is 1518 N.
Woodland  Park Drive,  Layton,  Utah 84041 (the  "Trustee"),  for the benefit of
TRANSAMERICA  OCCIDENTAL  LIFE  INSURANCE  COMPANY,  an  Iowa  corporation,   as
beneficiary, having an office c/o AEGON USA Realty Advisors, Inc., 4333 Edgewood
Road,  N.E.,  Cedar Rapids,  Iowa 52499-5443 (the "Lender").  The definitions of
capitalized  terms  used in this Deed of Trust may be found  either in Section 3
below, or through the cross-references provided in that Section.
1.____RECITALS


A.           Under   the   terms   of   a   commercial   Second   Revised   Loan
             Application/Commitment dated June 9, 2005 (the "Commitment"), AEGON
             USA  Realty  Advisors,  Inc.  ("AEGON"),  as agent for the  Lender,
             agreed to fund a loan in the principal  amount of Four Million Nine
             Hundred Forty Thousand Dollars ($4,940,000) (the "Loan").

B.           The  Lender has  funded  the Loan in the  principal  amount of Four
             Million  Nine  Hundred  Forty  Thousand  Dollars   ($4,940,000)  in
             accordance  with the  Commitment,  and to  evidence  the Loan,  the
             Borrower has executed and delivered to the Lender a certain Secured
             Promissory Note, of even date, in the amount of $4,940,000.


C.           The  Commitment  requires  that the Loan be  secured  by all of the
             Borrower's  existing  and  after-acquired  interest in certain real
             property and by certain tangible and intangible personal property.
2.           GRANTING CLAUSE



      To secure the repayment of the Indebtedness, any increases, modifications,
      renewals or extensions of the Indebtedness,  and any substitutions for the
      Indebtedness,   as  well  as  the  performance  of  the  Borrower's  other
      Obligations,  and in  consideration of the sum of Ten Dollars ($10.00) and
      other  valuable  consideration,  the receipt and  sufficiency of which are
      acknowledged, the Borrower grants, bargains, warrants, conveys, alienates,
      releases,  assigns,  sets over and confirms to the Trustee,  in trust with
      the power of sale for the benefit of the Lender and to its  successors and
      assigns  forever,  all of  the  Borrower's  existing  and  after  acquired
      interests in the Real Property.


3.     DEFINED TERMS
      The following  defined  terms are used in this Deed of Trust.  For ease of
      reference,  terms relating primarily to the Security Agreement are defined
      in Subsection 22.1.


<PAGE>


      "Absolute  Assignment of Leases and Rents" means the Loan Document bearing
      this heading.

      "Appurtenances" means all rights, estates, titles, interests,  privileges,
      easements,  tenements,   hereditaments,   titles,  royalties,  reversions,
      remainders and other interests,  whether presently held by the Borrower or
      acquired in the future,  that may be  conveyed  as  interests  in the Land
      under  the laws of  Utah.  Appurtenances  include  the  Easements  and the
      Assigned Rights.

      "Assigned  Rights"  means  all  of  the  Borrower's   rights,   easements,
      privileges, tenements, hereditaments, contracts, claims, licenses or other
      interests,  whether  presently  existing  or  arising in the  future.  The
      Assigned Rights include all of the Borrower's rights in and to:

(a)               any greater estate in the Real Property;
(b)               insurance policies required to be carried hereunder, including
                  the  right  to  negotiate  claims  and  to  receive  Insurance
                  Proceeds and unearned  insurance premiums (except as expressly
                  provided in Subsection 8.1);
(c)               Condemnation  Proceeds,  provided  that  the  award  does  not
                  reduce, directly or indirectly,  the award to the owner of the
                  Real Property;
(d)               licenses  and  agreements  permitting  the use of  sources  of
                  groundwater or water utilities,  septic leach fields, railroad
                  sidings, sewer lines, means of ingress and egress;
(e)               drainage over other property;
(f)               air space above the Land;
(g)               mineral rights;
(h)               party walls;
(i)               vaults and their usage;
(j)               franchises;

(k)  commercial  tort  claims  that  arise  during  the Loan term in  respect of
     damages  to the Real  Property  or to its  operations,  in  respect  of any
     impairment  to the  value  of  the  Real  Property,  or in  respect  of the
     collection of any Rents;

(l)               construction contracts;
(m)               roof and equipment guarantees and warranties;
(n)               building and development licenses and permits;
(o)               tax  credits or other  governmental  entitlements,  credits or
                  rights, whether or not vested;

(p)  licenses and applications (whether or not yet approved or issued);

(q)  rights under  management  and service  contracts;  leases of Fixtures;

(r)and

(s)  trade names,  trademarks,  trade styles, service marks, and copyrights that
     are directly related to the Property and reasonably necessary for operation
     of the Property or the  principal  manner with which the  Improvements  are
     identified,  and agreements  with  architects,  environmental  consultants,
     property tax consultants,  engineers, and any other third party contractors
     whose services benefit the Real Property.

      "Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as amended,  11
      U.S.C.  Sections 101 et seq., and the regulations  promulgated pursuant to
      those statutes.

      "Business  Day"  means any day when state and  federal  banks are open for
      business in Cedar Rapids, Iowa.

      "Carveout  Guarantee and Indemnity" means that certain "Carveout Guarantee
      and Indemnity  Agreement" entered into by the Carveout Obligor on the date
      of this Deed of Trust.

      "Carveout Obligations" means those obligations described in Section 21.

      "Carveout  Obligor"  means AIMCO  Properties,  L.P.  Any other  person who
      expressly assumes liability for the Carveout  Obligations  during the term
      of the Loan shall become a "Carveout Obligor" for purposes of this Deed of
      Trust.

      "Carveouts" means those matters from which Carveout Obligations may arise,
      which are described in Section 21.

      "Condemnation  Proceeds"  means all money or other property that has been,
      or is in the future,  awarded or agreed to be paid or given in  connection
      with any taking by eminent  domain of all or any part of the Real Property
      (including  a taking  through  the  vacation of any street  dedication  or
      through  a  change  of  grade  of  such a  street),  either  permanent  or
      temporary, or in connection with any purchase in lieu of such a taking, or
      as a part of any related settlement,  except for the right to condemnation
      proceeds awarded to the tenant in a separate  proceeding in respect of the
      lost value of the tenant's  leasehold  interest,  provided  that the award
      does not  reduce,  directly or  indirectly,  the award to the owner of the
      Real Property.

      "Curable  Nonmonetary  Default"  means  any of  the  acts,  omissions,  or
      circumstances specified in Subsection 10.3 below.

      "Default" means any of the acts, omissions,  or circumstances specified in
      Section 10 below.

      "Default Rate" means the rate of interest  specified as the "Default Rate"
      in the Note.



<PAGE>


      "Development  Agreements"  means  all  development,   utility  or  similar
      agreements included in the Permitted Encumbrances.

      "Easements"  means the Borrower's  existing and future interests in and to
      the declarations,  easements,  covenants,  and restrictions appurtenant to
      the Land.

      "Environmental  Indemnity  Agreement" means the Loan Document bearing that
      heading.

      "Environmental   Laws"  means  all  present  and  future  laws,  statutes,
      ordinances,  rules,  regulations,  orders,  guidelines,  rulings, decrees,
      notices and  determinations  of any  Governmental  Authority to the extent
      that they pertain to: (A) the protection of health  against  environmental
      hazards;  (B) the protection of the  environment,  including  air,  soils,
      wetlands,  and surface and underground  water,  from  contamination by any
      substance  that may have any adverse  health effect on humans,  livestock,
      fish,  wildlife,  or plant life,  or which may disturb an  ecosystem;  (C)
      underground storage tank regulation or removal; (D) wildlife conservation;
      (E) protection or regulation of natural  resources;  (F) the protection of
      wetlands;  (G) management,  regulation and disposal of solid and hazardous
      wastes; (H) radioactive  materials;  (I) biologically hazardous materials;
      (J) indoor air quality; or (K) the manufacture, possession, presence, use,
      generation,   storage,   transportation,   treatment,  release,  emission,
      discharge,  disposal, abatement, cleanup, removal, remediation or handling
      of  any   Hazardous   Substances.   "Environmental   Laws"   include   the
      Comprehensive Environmental Response,  Compensation, and Liability Act, as
      amended by the Superfund  Amendments and  Reauthorization  Act of 1986, 42
      U.S.C.  ss.9601 et seq.,  the Resource  Conservation  and Recovery Act, 42
      U.S.C.  ss.6901 et seq.,  the  Federal  Water  Pollution  Control  Act, as
      amended by the Clean Water Act, 33 U.S.C.  ss. 1251 et seq., the Clean Air
      Act,  42 U.S.C.  ss.7401 et seq.,  the Toxic  Substances  Control  Act, 15
      U.S.C.  ss.2601 et seq., all similar state statutes and local  ordinances,
      and all  regulations  promulgated  under  any of those  statutes,  and all
      administrative  and judicial actions  respecting such legislation,  all as
      amended from time to time.

      "ESA" means the written environmental site assessment of the Real Property
      obtained under the terms of the Commitment.

      "Escrow  Expenses"  means those  expenses in respect of real and  personal
      property  taxes  and  assessments,   Insurance  Premiums  and  such  other
      Impositions  as the Lender pays from time to time directly from the Escrow
      Fund using monies  accumulated  through the  collection of Monthly  Escrow
      Payments.

      "Escrow  Fund"  means the funds  deposited  by  Borrower  with the  Lender
      pursuant  to  Section 9  hereof,  as  reflected  in the  accounting  entry
      maintained  on the books of the Lender as funds  available for the payment
      of Escrow Expenses under the terms of this Deed of Trust.

     "Fixtures" means all materials,  supplies,  equipment,  apparatus and other
     items  now  or  hereafter   attached  to  or  installed  on  the  Land  and
     Improvements in a manner that causes them to become fixtures under the laws
     of Utah,  including  all  built-in or  attached  furniture  or  appliances,
     elevators,  escalators,  heating,  ventilating and air conditioning  system
     components,  emergency  electrical  generators  and related fuel storage or
     delivery  systems,   septic  system  components,   storm  windows,   doors,
     electrical equipment,  plumbing,  water conditioning,  lighting,  cleaning,
     snow  removal,  lawn,  landscaping,   irrigation,  security,  incinerating,
     fire-fighting,  sprinkler or other fire safety equipment,  bridge cranes or
     other installed  materials  handling  equipment,  satellite dishes or other
     telecommunication  equipment,  built-in video conferencing equipment, sound
     systems or other audiovisual equipment,  and cable television  distribution
     systems.  Fixtures do not include  trade  fixtures,  office  furniture  and
     office  equipment  owned by  tenants  who are  unrelated  to the  Borrower.
     Fixtures expressly include HVAC,  mechanical,  security and similar systems
     of general  utility  for the  operation  of the  Improvements  as  leasable
     commercial real property.

      "Governmental  Authority"  means  any  political  entity  with  the  legal
      authority  to  impose  any  requirement  on the  Property,  including  the
      governments  of the United  States,  the State of Utah,  Salt Lake County,
      Salt  Lake  City,  and any  other  entity  with  jurisdiction  to  decide,
      regulate,   or  affect  the  ownership,   construction,   use,  occupancy,
      possession,  operation,  maintenance,  alteration,  repair,  demolition or
      reconstruction of any portion or element of the Real Property.

      "Hazardous  Substance"  means any substance the release of or the exposure
      to which is prohibited,  limited or regulated by any Environmental Law, or
      which poses a hazard to human health  because of its toxicity,  including,
      without  limitation:  (A) any  "oil,"  as  defined  by the  Federal  Water
      Pollution Control Act and regulations  promulgated  thereunder  (including
      crude oil or any fraction of crude oil),  (B) any  radioactive  substance,
      and  (C)  Stachybotrys   chartarum  or  other  molds.  However,  the  term
      "Hazardous  Substance"  includes  neither  (A) a  substance  used  in  the
      cleaning and  maintenance of the Real Property,  if the quantity,  storage
      and  manner  of its  use  are  customary,  prudent,  and  do  not  violate
      applicable law, nor (B) automotive motor oil in immaterial quantities,  if
      leaked from  vehicles in the ordinary  course of the operation of the Real
      Property and cleaned up in accordance with reasonable  property management
      procedures and in a manner that violates no applicable law.

      "Impositions"  means all real and personal  property  taxes levied against
      the Property;  general or special  assessments;  ground rent;  water, gas,
      sewer,  vault,  electric or other  utility  charges;  common area charges;
      owners'  association  dues or fees;  fees  for any  easement,  license  or
      agreement  maintained  for the  benefit of the  Property;  and any and all
      other taxes, levies, user fees, claims, charges and assessments whatsoever
      that at any time may be  assessed,  levied or imposed on the  Property  or
      upon its ownership,  use,  occupancy or enjoyment,  and any related costs,
      interest or penalties. In addition, "Impositions" include all documentary,
      stamp  or  intangible  personal  property  taxes  that may  become  due in
      connection with the Indebtedness, including Indebtedness in respect of any
      future advance made by the Lender to the Borrower,  or that are imposed on
      any of the Loan Documents.

      "Improvements"  means, to the extent of the Borrower's existing and future
      interest,  all buildings and improvements of any kind erected or placed on
      the Land now or in the future,  including the Fixtures,  together with all
      appurtenant  rights,  privileges,  Easements,  tenements,   hereditaments,
      titles, reversions, remainders and other interests.

     "Indebtedness"  means all sums that are owed or become due  pursuant to the
     terms of the Note,  this Deed of Trust,  or any of the other Loan Documents
     or any  other  writing  executed  by the  Borrower  relating  to the  Loan,
     including  scheduled  principal  payments,   scheduled  interest  payments,
     default interest, late charges, prepayment premiums, accelerated or matured
     principal  balances,  advances,   collection  costs  (including  reasonable
     attorneys'  fees),  reasonable  attorneys'  fees and costs in  enforcing or
     protecting the Note, the Deed of Trust,  or any of the other Loan Documents
     in any probate,  bankruptcy or other proceeding,  receivership  costs, fees
     and  costs  of the  Trustee  and all  other  financial  obligations  of the
     Borrower  incurred  in  connection  with  the Loan  transaction,  provided,
     however,  that this Deed of Trust shall not secure any Loan Document or any
     particular  person's  liabilities or obligations under any Loan Document to
     the  extent  that  such  Loan  Document  expressly  states  that it or such
     particular  person's  liabilities or obligations are unsecured by this Deed
     of Trust.  Indebtedness shall also include any obligations under agreements
     executed and  delivered by Borrower  which  specifically  provide that such
     obligations are secured by this Deed of Trust.

      "Insurance  Premiums"  means all  premiums  or other  charges  required to
      maintain in force any and all  insurance  policies that this Deed of Trust
      requires that the Borrower maintain.

      "Insurance  Proceeds"  means  (A) all  proceeds  of all  insurance  now or
      hereafter  carried by or payable to the Borrower  with respect to the Real
      Property,  including with respect to the  interruption  of rents or income
      derived from the Property, all unearned insurance premiums and all related
      claims or demands, and (B) all Proceeds (as defined in Subsection 22.1).

      "Land"  means that certain  tract of land located in Salt Lake City,  Salt
      Lake County,  Utah, which is described on the attached Exhibit A, together
      with the Appurtenances.

      "Leases" means all leases, subleases, licenses,  concessions,  extensions,
      renewals  and other  agreements  (whether  written  or oral,  and  whether
      presently  effective  or made in the future)  through  which the  Borrower
      grants any  possessory  interest in and to, or any right to occupy or use,
      all or any part of the Real Property, and any related guaranties.

      "Legal  Control"  means the  power,  either  directly  or  indirectly,  to
      exercise the  authority of the owner of the Real  Property,  either as the
      majority  shareholder  of the common stock of a  corporation,  as the sole
      general partner of a limited partnership,  as the managing general partner
      of a general  partnership,  or as the sole manager of a limited  liability
      company,  provided the entity exercising such authority cannot be divested
      of such  authority  without its consent,  either  directly or  indirectly,
      except for cause.

      "Legal  Requirements"  means  all  laws,  statutes,   rules,  regulations,
      ordinances,   judicial  decisions,   administrative  decisions,   building
      permits,   development  permits,   certificates  of  occupancy,  or  other
      requirements of any Governmental Authority.

      "Loan Documents"  means all documents  evidencing the Loan or delivered in
      connection with the Loan,  whether entered into at the closing of the Loan
      or in the future.

      "Maximum  Permitted Rate" means the highest rate of interest  permitted to
      be paid or collected by applicable law with respect to the Loan.

      "Monthly  Escrow  Payment"  means  the  sum  of  the  Monthly   Imposition
      Requirement,  the Monthly Insurance Premium  Requirement,  and the Monthly
      Reserve Requirement.

     "Monthly Imposition  Requirement" means one-twelfth  (1/12th) of the annual
     amount  that the Lender  estimates  will be  required  to permit the timely
     payment by the Lender of those  Impositions  that the Lender  elects,  from
     time to time,  to  include in the  calculation  of the  Monthly  Imposition
     Requirement.  Such  Impositions  shall  include real and personal  property
     taxes and may include,  at the Lender's  sole and absolute  discretion  any
     Impositions  that the  Borrower  has  failed to pay or to  escrow  for on a
     timely  basis  during  the term of the  Loan.  The  Lender  shall  base its
     estimate on the most recent information supplied by the Borrower concerning
     future Impositions.  If the Borrower fails to supply such information or if
     it is  unavailable  at the time of  estimation,  the Lender shall  estimate
     future  Impositions  using  historical  information and an annual inflation
     factor equal to the lesser of five  percent (5%) and the maximum  inflation
     factor permitted by law.

      "Monthly Insurance Premium  Requirement" means one-twelfth (1/12th) of the
      annual  amount that the Lender  estimates  (based on available  historical
      data and using, if future Insurance Premiums are as yet undeterminable,  a
      five percent (5%) inflation  factor) will be required to permit the timely
      payment of the Insurance Premiums by the Lender.

      "Monthly Reserve  Requirement"  means the monthly payment amount which the
      Lender estimates will, over the subsequent  twelve (12) months,  result in
      the  accumulation  of a surplus in the Escrow Fund equal to the sum of the
      Monthly   Imposition   Requirement  and  the  Monthly   Insurance  Premium
      Requirement.

      "Net  Worth  Requirement"  means  a  minimum  net  worth  of the  Carveout
      Obligor's  publicly  reported  net  shareholder's  equity of Five  Hundred
      Million Dollars ($500,000,000).

      "Note" means the Secured  Promissory  Note dated of even date  herewith to
      evidence the Indebtedness in the original principal amount of Four Million
      Nine  Hundred  Forty  Thousand  Dollars  ($4,940,000),  together  with all
      extensions, renewals and modifications.

      "Notice"  means a  notice  given in  accordance  with  the  provisions  of
      Subsection 26.13.

      "Obligations" means all of the obligations  required to be performed under
      the terms and  conditions  of any of the Loan  Documents  by any  Obligor,
      except for obligations that are expressly stated to be unsecured under the
      terms of another Loan Document.

      "Obligor" means the Borrower,  the Carveout  Obligor,  or any other Person
      that is liable under the Loan  Documents for the payment of any portion of
      the Indebtedness,  or the performance of any other obligation  required to
      be performed  under the terms and conditions of any of the Loan Documents,
      under any circumstances.

      "Participations"  means  participation  interests  in the  Loan  Documents
      granted by the Lender.

      "Permitted  Encumbrances"  means (A) the lien of taxes and assessments not
      yet due and  payable,  and (B) those  matters of public  record  listed as
      special  exceptions in the Lender's title  insurance  policy  insuring the
      priority of this Deed of Trust.

      "Permitted Transfer" means a transfer specifically described in Section 14
      as permitted.

      "Person" means any individual,  corporation,  limited  liability  company,
      partnership, trust, unincorporated association,  government,  governmental
      authority or other entity.

<PAGE>

      "Property"  means the Real Property and the Personal  Property (as defined
      in  Subsection  22.1 below).  "Rating  Agencies"  means one or more credit
      rating  agencies  approved by Lender.  "Real Property" means the Land, the
      Improvements,  the Leases and the Rents. "REIT" means Apartment Investment
      and Management Company.

      "Rents" means all rents,  income,  receipts,  issues and profits and other
      benefits  paid or  payable  for  using,  leasing,  licensing,  possessing,
      operating from or in, residing in, selling,  mining,  extracting  minerals
      from, or otherwise enjoying the Real Property,  whether presently existing
      or arising  in the  future,  to which the  Borrower  may now or  hereafter
      become  entitled or may demand or claim from the  commencement of the Loan
      term  through  the  time of the  satisfaction  of all of the  Obligations,
      including  security  deposits,  amounts  drawn  under  letters  of  credit
      securing tenant obligations,  minimum rents, additional rents, common area
      maintenance  charges,  parking  revenues,  deficiency  rents,  termination
      payments,  space contraction  payments,  damages following default under a
      Lease,  premiums  payable by tenants upon their  exercise of  cancellation
      privileges,  proceeds from lease  guarantees,  proceeds  payable under any
      policy of insurance covering loss of rents resulting from  untenantability
      caused by  destruction  or damage to the Real  Property,  all  rights  and
      claims  of any kind  which  the  Borrower  has or may in the  future  have
      against the tenants under the Leases, lease guarantors,  or any subtenants
      or other  occupants of the Real Property,  all proceeds of any sale of the
      Real Property in violation of the Loan Documents, any future award granted
      the  Borrower  in any court  proceeding  involving  any such tenant in any
      bankruptcy,  insolvency,  or  reorganization  proceedings  in any state or
      federal court, and any and all payments made by any such tenant in lieu of
      rent.

      "Restoration"  means (A) in the case of a casualty  resulting in damage to
      or the  destruction of the  Improvements,  the repair or rebuilding of the
      Improvements to a condition that is at least  equivalent to that as of the
      date of this Deed of Trust,  or (B) in the case of the  condemnation  of a
      portion  of the  Real  Property,  the  completion  of such  work as may be
      necessary in order to remedy the effects of the  condemnation  so that the
      value  and  income-generating  characteristics  of the Real  Property  are
      restored.

      "Securities" means mortgage pass-through  certificates or other securities
      evidencing a beneficial interest in the Loan, issued in a rated or unrated
      public offering or private placement.

      "Securitization" means the issuance of Securities.


     4. TITLE

     The  Borrower  represents  to and  covenants  with the  Lender and with its
     successors  and assigns that, at the point in time of the grant of the lien
     created  by this Deed of Trust,  the  Borrower  is well  seized of good and
     indefeasible title to the Real Property, in fee simple absolute, subject to
     no lien or  encumbrance  except the  Permitted  Encumbrances.  The Borrower
     warrants  this  estate and title to the Lender  and to its  successors  and
     assigns forever,  against all lawful claims and demands of all persons. The
     Borrower  shall  maintain  mortgagee  title  insurance  issued by a solvent
     carrier,  covering  the Real  Property  in an amount at least  equal to the
     amount of the Loan's original principal balance.  This Deed of Trust is and
     shall remain a valid and enforceable  first lien on the Real Property,  and
     if the  validity  or  enforceability  of this  first  lien is  attacked  by
     appropriate  proceedings,  the Borrower shall  diligently and  continuously
     defend it through appropriate  proceedings.  Should the Borrower fail to do
     so, the Lender may at the  Borrower's  expense take all  necessary  action,
     including the engagement and compensation of legal counsel, the prosecution
     or defense of litigation,  and the  compromise or discharge of claims.  The
     Borrower shall defend,  indemnify and hold the Lender  harmless in any suit
     or proceeding  brought to challenge or attack the validity,  enforceability
     or  priority  of the  lien  granted  by  this  Deed  of  Trust.  If a prior
     construction,  mechanics' or materialmen's lien on the Real Property arises
     by  operation  of  statute  during  any   construction  or  repair  of  the
     Improvements,  the Borrower shall either cause the lien to be discharged by
     paying  when due any amounts  owed to such  persons,  or shall  comply with
     Section 12 of this Deed of Trust.  5.  REPRESENTATIONS  OF THE BORROWER The
     Borrower represents to the Lender as follows:

      5.1    FORMATION, EXISTENCE, GOOD STANDING

            The  Borrower  is a  limited  partnership  duly  organized,  validly
            existing and in good standing  under the laws of California  and has
            obtained  all  licenses  and  permits  and filed all  statements  of
            fictitious name and registrations necessary for the lawful operation
            of its business in California.

      5.2    QUALIFICATION TO DO BUSINESS

            The  Borrower  is  qualified  to do  business  as a foreign  limited
            partnership under the laws of Utah and has obtained all licenses and
            permits   and  filed  all   statements   of   fictitious   name  and
            registrations  necessary for the lawful operation of its business in
            Utah.

      5.3    POWER AND AUTHORITY

            The Borrower  has full power and  authority to carry on its business
            as presently conducted,  to own the Property, to execute and deliver
            the Loan Documents, and to perform its Obligations.

      5.4    ANTI-TERRORISM REGULATIONS

            Neither the  Borrower,  any  affiliate of the  Borrower,  nor to the
            Borrower's  actual  knowledge,  shareholder  of the REIT or  limited
            partner  of  the  Carveout  Obligor,  is  a  "Specially   Designated
            National"  or a "Blocked  Person" as those  terms are defined in the
            Office of Foreign Asset Control  Regulations  (31 CFR Section 500 et
            seq.).

      5.5    DUE AUTHORIZATION

          The Loan  transaction  and the  performance  of all of the  Borrower's
          Obligations  have been duly  authorized by all  requisite  partnership
          action,  and each individual  executing any Loan Document on behalf of
          the Borrower has been duly authorized to do so.

       5.6   NO DEFAULT OR VIOLATIONS

            To the best of Borrower's  knowledge,  the execution and performance
            of the Borrower's  Obligations  will not result in any breach of, or
            constitute a default  under,  any contract,  agreement,  document or
            other  instrument  to which the  Borrower is a party or by which the
            Borrower  may be bound or  affected,  and to the best of  Borrower's
            knowledge,  do not and will not  violate  or  contravene  any law to
            which  the  Borrower  is  subject;  nor to the  best  of  Borrower's
            knowledge,  do any such other instruments  impose or contemplate any
            obligations  which  are  or  will  be  inconsistent  with  the  Loan
            Documents.

       5.7   NO FURTHER APPROVALS OR ACTIONS REQUIRED

            To the best of Borrower's  knowledge,  no approval by, authorization
            of,  or  filing  with  any  federal,  state  or  municipal  or other
            governmental  commission,  board or  agency  or  other  governmental
            authority  is  necessary  in  connection  with  the   authorization,
            execution and delivery of the Loan Documents by the Borrower.

       5.8   DUE EXECUTION AND DELIVERY

            Each of the Loan Documents to which the Borrower is a party has been
            duly executed and delivered on behalf of the Borrower.

       5.9   LEGAL, VALID, BINDING AND ENFORCEABLE

            Each  of the  Loan  Documents  to  which  the  Borrower  is a  party
            constitutes the legal, valid and binding obligation of the Borrower,
            enforceable against the Borrower in accordance with its terms.

      5.10 ACCURATE FINANCIAL INFORMATION

            All financial information furnished by the Borrower to the Lender in
            connection with the  application  for the Loan is true,  correct and
            complete  in all  material  respects  and does not omit to state any
            fact or  circumstance  necessary to make the  statements in them not
            misleading,  and there has been no  material  adverse  change in the
            financial condition of the Borrower since the date of such financial
            information.

      5.11 COMPLIANCE WITH LEGAL REQUIREMENTS

            To the best of Borrower's knowledge,  all governmental approvals and
            licenses required for the conduct of the Borrower's business and for
            the  maintenance  and  operation of the Real  Property in compliance
            with  applicable  law are in full  force  and  effect,  and the Real
            Property is currently  being  operated in compliance  with the Legal
            Requirements in all material respects.

      5.12 CONTRACTS AND FRANCHISES

            To the best of Borrower's  knowledge,  all contracts and  franchises
            necessary  for the conduct of the  Borrower's  business  and for the
            operation of the Real  Property in accordance  with good  commercial
            practice are in force.

<PAGE>

      5.13 NO CONDEMNATION PROCEEDING

            As of the date of this Deed of Trust,  the Borrower has no knowledge
            of any present,  pending or  threatened  condemnation  proceeding or
            award affecting the Real Property.

      5.14 NO CASUALTY

            As of the date of this Deed of Trust, no damage to the Real Property
            by any fire or other  casualty has occurred,  other than damage that
            has been  completely  repaired in  accordance  with good  commercial
            practice and in compliance with applicable law.

      5.15 INDEPENDENCE OF THE REAL PROPERTY

            The Real Property may be operated  independently from other land and
            improvements  not included  within or located on the Land, and it is
            not  necessary  to own or control any  property  other than the Real
            Property in order to meet the  obligations of the landlord under any
            Lease, or in order to comply with the Legal Requirements.

      5.16 COMPLETE LOTS AND TAX PARCELS

            The Land is comprised  exclusively  of tax parcels that are entirely
            included  within  the  Land,  and,  if the  Land is  subdivided,  of
            subdivision lots that are entirely included within the Land.

      5.17 OWNERSHIP OF FIXTURES

            The Borrower owns the Fixtures free of any  encumbrances,  including
            purchase money security interests,  rights of lessors, and rights of
            sellers  under   conditional  sales  contracts  or  other  financing
            arrangements.

      5.1 8 COMMERCIAL PROPERTY

            The Real Property is used as a multifamily apartment complex and the
            Loan is for commercial purposes and not made for personal, family or
            household purposes.

      5.19 PERFORMANCE UNDER DEVELOPMENT AGREEMENTS

            To the best of Borrower's  knowledge,  all of the obligations of the
            owner of the Real Property due under the Development Agreements have
            been fully, timely and completely performed and such performance has
            been accepted by the related governmental agency or utility company,
            and no  Governmental  Authority has alleged that any default  exists
            under any of the Development Agreements.

      5.20 STATUS OF CERTAIN TITLE MATTERS

          To the best of Borrower's  knowledge,  each of the Easements  included
          within the Appurtenances (a) is valid and in full force and effect and
          may not be  amended or  terminated,  except  for  cause,  without  the
          consent of the Borrower, (b) has not been amended or supplemented, (c)
          requires no approval of the  Improvements  that has not been obtained,
          (d) is free of defaults or alleged defaults,  (e) does not provide for
          any  assessment  against the Real  Property  that has not been paid in
          full,  and (f) has not been violated by the owner of the Real Property
          or, to the best of the Borrower's knowledge, by any tenant of the Real
          Property.

      5.21 NO PROHIBITED TRANSACTIONS

            The Borrower  represents  to the Lender that either (a) the Borrower
            is not an "employee benefit plan" within the meaning of the Employee
            Retirement Income Security Act of 1974, as amended  ("ERISA"),  that
            is  subject  to Title I of ERISA,  a "plan"  within  the  meaning of
            Section 4975 of the Internal  Revenue Code of 1986,  as amended (the
            "Code"),  or an entity that is deemed to hold "plan  assets"  within
            the meaning of 29 C.F.R.  ss.2510.3-101 of any such employee benefit
            plan, or (b) the entering into of the Loan Documents, the acceptance
            of the Loan by the Borrower  and the  existence of the Loan will not
            result in a non-exempt prohibited  transaction under ss.406 of ERISA
            or Section  4975 of the Code.  The  Borrower  further  warrants  and
            covenants that the foregoing  representation will remain true during
            the term of the Loan.


6.     COVENANTS

      6.1    GOOD STANDING

            The Borrower shall remain in good standing as a limited  partnership
            under  the laws of  California,  and  shall  maintain  in force  all
            statements of fictitious  name and  registrations  necessary for the
            lawful  operation of its business in  California  during the term of
            the Loan.

      6.2    QUALIFICATION TO DO BUSINESS

            The  Borrower  shall  remain  qualified  to do business as a foreign
            limited  partnership  under the laws of Utah,  and shall maintain in
            force all licenses and permits, filings and statements of fictitious
            name and  registrations  necessary  for the lawful  operation of its
            business in Utah.

      6.3    NO DEFAULT OR VIOLATIONS

            The Borrower shall not enter into any contract,  agreement, document
            or  other   instrument,   if  the   performance  of  the  Borrower's
            Obligations  would result in any breach of, or  constitute a default
            under, any such contract,  agreement,  document or other instrument,
            or if the contract,  agreement,  document or other  instrument would
            impose or contemplate any obligations the performance of which would
            result  in  a  Default   under  the  Loan   Documents  or  would  be
            inconsistent with the performance of the Borrower's Obligations.

      6.4 PAYMENT AND PERFORMANCE

            The Borrower shall pay the Indebtedness and perform all of its other
            Obligations, as and when the Loan Documents require such payment and
            performance.

      6.5    PAYMENT OF IMPOSITIONS

          The Borrower  shall pay the  Impositions  on or before the last day on
          which they may be paid without penalty or interest,  and shall, within
          thirty  (30)  days,  furnish  the  Lender  with  a paid  receipt  or a
          cancelled check as evidence of payment. If the Lender does not receive
          such evidence,  the Lender may obtain it directly.  If it does so, the
          Lender will charge the Borrower an  administrative  fee of Two Hundred
          Fifty Dollars ($250) for securing the evidence of payment. The payment
          of this fee shall be a demand obligation of the Borrower. The Borrower
          may meet the Imposition payment requirements of this Subsection 6.5 by
          remitting  the  Monthly  Escrow  Payments  when  due,  by  immediately
          providing  Notice to the  Lender of any new  Imposition  or  increased
          Imposition  unknown  to the  Lender,  and by paying  to the  Lender on
          demand any amount  required to  increase  the Escrow Fund to an amount
          sufficient to permit the Lender to pay all Impositions from the Escrow
          Fund on time. If the Borrower wishes to contest the validity or amount
          of an  Imposition,  it may do so by complying  with Section 12. If any
          new  Legal  Requirement  (other  than a  general  tax on  income or on
          interest  payments)  taxes  the Deed of Trust so that the yield on the
          Indebtedness  would be reduced,  and the Borrower may lawfully pay the
          tax or reimburse the Lender for its payment, the Borrower shall do so.

          6.6 MAINTENANCE OF THE REAL PROPERTY

            The  Borrower  shall  not  commit  or  permit  any waste of the Real
            Property as a physical or economic asset,  and agrees to maintain in
            good  repair  the   Improvements,   including   structures,   roofs,
            mechanical systems, parking lots or garages, and other components of
            the Real Property that are necessary or desirable for the use of the
            Real Property,  or which the Borrower as landlord under any Lease is
            required  to  maintain  for  the  benefit  of  any  tenant.  In  its
            performance of this Obligation, the Borrower shall promptly and in a
            good and  workmanlike  manner repair or restore,  as required  under
            Subsection 6.16, any elements of the  Improvements  that are damaged
            or destroyed.  The Borrower shall also replace roofs,  parking lots,
            mechanical systems, and other elements of the Improvements requiring
            periodic replacement. The Borrower shall carry out such replacements
            no less  frequently  than  would  a  commercially  reasonable  owner
            intending to maintain the maximum income-generating potential of the
            Real Property over its reasonable  economic life. The Borrower shall
            not,  without the prior  written  consent of the  Lender,  demolish,
            reconfigure,  or  materially  alter the  structural  elements of the
            Improvements,  unless  such  an  action  is  the  obligation  of the
            Borrower  under a Lease approved by Lender or for which the Lender's
            approval is not required under the Absolute Assignment of Leases and
            Rents. The Lender agrees that any request for its consent to such an
            action shall be deemed  given if the Lender does not respond  within
            fifteen  (15)  Business  Days  to any  written  request  for  such a
            consent,  if the request is accompanied by all materials required to
            permit the Lender to analyze the proposed action.

       6.7   USE OF THE REAL PROPERTY

            The  Borrower  agrees that the Real  Property  may only be used as a
            residential  apartment  complex and for no other  purpose.  The Real
            Property  may  not be  converted  to a  cooperative  or  condominium
            without  Lender's  prior  written  consent,  which  consent  may  be
            withheld in Lender's sole and absolute discretion.

       6.8   LEGAL REQUIREMENTS

          The Borrower shall maintain in full force and effect all  governmental
          approvals  and  licenses  required  for the conduct of the  Borrower's
          business and for the maintenance and operation of the Real Property in
          compliance  with  applicable  law,  and  shall  comply  with all Legal
          Requirements relating to the Real Property at all times.

      6.9    CONTRACTS AND FRANCHISES

            The Borrower  shall  maintain in force all contracts and  franchises
            necessary  for the conduct of the  Borrower's  business  and for the
            operation of the Real  Property in accordance  with good  commercial
            practice.

      6.10 COVENANTS REGARDING CERTAIN TITLE MATTERS

            The  Borrower  shall  promptly  pay,  perform and observe all of its
            obligations under the Easements included within the Appurtenances or
            under  reciprocal   easement   agreements,   operating   agreements,
            declarations,  and restrictive  covenants  included in the Permitted
            Encumbrances,  shall not modify or consent to the termination of any
            of them  without  the prior  written  consent of the  Lender,  shall
            promptly  furnish  the Lender  with copies of all notices of default
            under them, and shall cause all covenants and conditions  under them
            and benefiting the Real Property to be fully performed and observed.

      6.11 INDEPENDENCE OF THE REAL PROPERTY

            The Borrower  shall maintain the  independence  of the Real Property
            from other land and  improvements  not included within or located on
            the Land. In fulfilling  this  covenant,  the Borrower shall neither
            take any action  which would make it necessary to own or control any
            property  other  than  the  Real  Property  in  order  to  meet  the
            obligations of the landlord  under any Lease,  or in order to comply
            with the Legal  Requirements,  nor take any action which would cause
            any land or improvements other than the Land and the Improvements to
            rely upon the Land or the Improvements for those purposes.

      6.12 COMPLETE LOTS AND TAX PARCELS

            The Borrower shall take no action that would result in the inclusion
            of any portion of the Land in a tax parcel or  subdivision  lot that
            is not entirely included within the Land.

      6.13 COMMERCIAL PROPERTY

            The  Real  Property  shall  be used  for  commercial  purposes  as a
            multifamily  residential  apartment  complex and not by Borrower for
            residential, personal, family or household purposes.

      6.14 PERFORMANCE UNDER DEVELOPMENT AGREEMENTS

            The Borrower shall fully,  timely and completely  perform all of the
            obligations  of the  owner  of  the  Real  Property  due  under  the
            Development  Agreements  and shall cause no default under any of the
            Development Agreements.

      6.15 STATUS OF CERTAIN TITLE MATTERS

          The Borrower shall not take or fail to take any action with respect to
          the Easements  included  within the  Appurtenances  or the  reciprocal
          easement   agreements,   operating   agreements,   declarations,   and
          restrictive  covenants included in the Permitted  Encumbrances,  if as
          the result of such an action or failure, the subject Easement or other
          title matter would (a) be rendered invalid or without force or effect,
          (b) be amended or supplemented  without the consent of the Lender, (c)
          be  placed in  default  or  alleged  default,  (d)  result in any lien
          against the Real Property,  or (e) give rise to any assessment against
          the Real Property,  unless  immediately paid in full.

6.16 RESTORATION UPON CASUALTY OR CONDEMNATION

            If a casualty or  condemnation  occurs,  the Borrower shall promptly
            commence the  Restoration of the Real  Property,  to the extent that
            the Lender has made  Insurance  Proceeds  or  Condemnation  Proceeds
            available to the Borrower for such Restoration.

      6.17 PERFORMANCE OF LANDLORD OBLIGATIONS

            The Borrower  shall perform its  obligations  as landlord  under the
            Leases,  shall cause the Real Property to be  professionally  leased
            and  managed in a manner  that is  consistent  with good  commercial
            practices  for   institutional   owners  of  multifamily   apartment
            projects,  and shall  neither take any action,  nor fail to take any
            action,  if the action or  failure  would be  inconsistent  with the
            commercially  reasonable  management  of the Real  Property  for the
            purpose of  enhancing  its  long-term  performance  and  value.  The
            Borrower shall not, without the Lender's  written  consent,  extend,
            modify, declare a default under,  terminate, or enter into any Lease
            of the Real Property.

      6.1 8 FINANCIAL REPORTS AND OPERATING STATEMENTS

     (a)  Maintenance  of Books and  Records  During  the term of the Loan,  the
          Borrower   shall  maintain   complete  and  accurate   accounting  and
          operational records, including copies of all Leases and other material
          written  contracts  relating to the Real  Property,  copies of all tax
          statements,  and  evidence  to support  the  payment  of all  material
          property-related expenses.

     (b)  Delivery of  Financial  and  Property-Related  Information  Within one
          hundred  twenty (120) days after the end of each of its fiscal  years,
          or, if a Default exists,  on demand by the Lender,  the Borrower shall
          deliver to the Lender (A) copies of the  financial  statements  of the
          Borrower  and  its  general  partner,  including  balance  sheets  and
          earnings  statements,  (B) a complete and accurate operating statement
          for the Real  Property,  and (C) a  complete  rent  roll,  all in form
          satisfactory  to the Lender.  The rent roll must be  certified  by the
          Borrower to be true and correct and must include each  tenant's  name,
          unit type and number,  premises,  rent, lease expiration date, renewal
          options and related rental rates,  delinquencies and vacancies. If the
          Borrower fails to deliver the items required in this  Subsection,  the
          Lender may engage an  accounting  firm to prepare the required  items.
          The  Borrower  shall  cooperate  fully  with any  investigative  audit
          required to permit the accounting firm to produce these items, and the
          fees and expenses  incurred in connection with their preparation shall
          be paid on demand by the Borrower.


     (c)  Efect of Failure  to  Deliver  Financial  and  Property  Reports If no
          Default  exists and the Borrower  fails to provide the  financial  and
          property  reports  required under this Section or the Carveout Obligor
          fails to  provide  its  financial  statements  as  required  under the
          Carveout  Guarantee and Indemnity  Agreement within one hundred twenty
          (120) days of the close of any fiscal year,  the Lender will provide a
          Notice  of this  failure  and a thirty  (30)-day  opportunity  to cure
          before a Default  shall exist.  All monthly  payments of principal and
          interest  under the Note that  become due after  this cure  period has
          elapsed  but before the  reports  are  received  by the Lender must be
          accompanied  by a fee of .000834  times the  principal  balance of the
          Loan at the beginning of the previous month, regardless of whether the
          Notice has asserted that the failure  constitutes a Default under this
          Deed of  Trust.  This  fee is to  compensate  the  Lender  for (A) the
          increased risk  resulting  from the Lender's  inability to monitor and
          service  the Loan using  up-to-date  information,  and (B) the reduced
          value and liquidity of the Loan as a financial asset.

     (d)  Certification  of Information  The financial and operating  statements
          provided  under this  Subsection  need not, as an initial  matter,  be
          certified by an independent certified public accountant as having been
          prepared in accordance with generally accepted accounting  principles,
          consistently applied, or, in the case of financial statements prepared
          on a cash or income  tax basis,  or of  operating  statements,  as not
          materially  misleading  based on an audit conducted in accordance with
          generally  accepted auditing  standards.  The Borrower shall,  however
          certify  that such  statements  are true and  correct,  and the Lender
          expressly  reserves  the right to require such a  certification  by an
          independent  certified public accountant if a Default exists or if the
          Lender has reason in the  exercise  of its  reasonable  discretion  to
          believe that any previously  provided financial or operating statement
          is misleading in any material respect.

      6.19 ESTOPPEL STATEMENTS

            Upon  request by the Lender,  the  Borrower  shall,  within ten (10)
            Business Days of Notice of the request,  furnish to the Lender or to
            whom it may direct, a written statement  acknowledging the amount of
            the Indebtedness and disclosing  whether,  to the best of Borrower's
            knowledge,  any offsets or defenses exist against the  Indebtedness.
            Thereafter,  the Borrower shall be estopped from asserting any other
            offsets or  defenses  alleged  to have  arisen as of the date of the
            statement.

      6.20 PROHIBITION ON CERTAIN DISTRIBUTIONS

            If  Default   exists   under   Subsection   10.1  or  under  any  of
            Subparagraphs  (b),  (c), (d), (e) or (f) of  Subsection  10.2,  the
            Borrower shall not pay any dividend or make any  partnership,  trust
            or other  distribution,  and shall not make any  payment or transfer
            any property in order to purchase,  redeem or retire any interest in
            its beneficial interests or ownership.

      6.21 USE OF LOAN PROCEEDS

          The Loan proceeds shall be used solely for commercial purposes.
<PAGE>

      6.22 PROHIBITION ON CUTOFF NOTICES

            The Borrower  shall not issue any Notice to the Lender to the effect
            that liens on the Real  Property  after the date of the Notice  will
            enjoy priority over the lien of this Deed of Trust.

      6.23 PROHIBITED PERSON COMPLIANCE

            Borrower  warrants,  represents and covenants that neither  Borrower
            nor any Obligor nor any of their respective  affiliated  entities is
            or will be an entity  or person  (i) that is listed in the Annex to,
            or is otherwise  subject to the provisions of Executive  Order 13224
            issued on September 24, 2001 ("EO  13224"),  (ii) whose name appears
            on the United States Treasury  Department's Office of Foreign Assets
            Control  ("OFAC")  most  current  list of  "Specifically  Designated
            National and Blocked  Persons,"  (which list may be  published  from
            time to time in various mediums  including,  but not limited to, the
            OFAC   website,   http:www.treas.gov/ofac/t11sdn.pdf),   (iii)   who
            commits,  threatens to commit or supports "terrorism",  as that term
            is defined in EO 13224, or (iv) who is otherwise affiliated with any
            entity  or person  listed  above  (any and all  parties  or  persons
            described in subparts  [i] - [iv] above are herein  referred to as a
            "Prohibited  Person").  Borrower  covenants  and agrees that neither
            Borrower,  nor any  Obligor nor any of their  respective  affiliated
            entities  will  (i)  conduct  any   business,   nor  engage  in  any
            transaction or dealing, with any Prohibited Person,  including,  but
            not limited to the making or receiving of any contribution of funds,
            goods, or services, to or for the benefit of a Prohibited Person, or
            (ii) engage in or conspire to engage in any transaction  that evades
            or avoids, or has the purpose of evading or avoiding, or attempts to
            violate,  any of the  prohibitions  set forth in  EO13224.  Borrower
            further  covenants  and  agrees to  deliver  (from  time to time) to
            Lender any such  certification or other evidence as may be requested
            by Lender in its sole and absolute  discretion,  confirming that (i)
            neither  Borrower nor any Obligor is a Prohibited  Person,  and (ii)
            neither  Borrower  nor any  Obligor  has  engaged  in any  business,
            transaction or dealings with a Prohibited Person, including, but not
            limited to, the making or  receiving of any  contribution  of funds,
            goods,  or services,  to or for the benefit of a Prohibited  Person.
            The  representations  and  warranties in this Section  regarding the
            current  status of Borrower and any Obligor are given to  Borrower's
            actual knowledge.


7.     INSURANCE REQUIREMENTS

      At all times until the  Indebtedness  is paid in full,  the Borrower shall
      maintain insurance coverage and administer  insurance claims in compliance
      with this Section.

      7.1    REQUIRED COVERAGES

               (a)  Open   Perils/Special   Form/Special   Perils  Property  The
                    Borrower shall maintain  "Open Perils,"  "Special  Form," or
                    "Special  Perils" property  insurance  coverage in an amount
                    not less than one hundred  percent (100%) of the replacement
                    cost of all  insurable  elements of the Real Property and of
                    all tangible Personal Property,  with coinsurance waived, or
                    if a coinsurance clause is in effect,  with an agreed amount
                    endorsement acceptable to the Lender.  Coverage shall extend
                    to the Real Property and to all tangible Personal Property.

            (b)    Broad Form Boiler and Machinery
                  If any  boiler or other  machinery  is located on or about the
                  Real  Property,  the Borrower shall maintain broad form boiler
                  and machinery  coverage,  including a form of business  income
                  coverage.

(c)   Flood

     If the Real Property is located in a special flood hazard area (that is, an
     area within the 100-year  floodplain)  according to the most current  flood
     insurance rate map issued by the Federal Emergency Management Agency and if
     flood  insurance is available,  the Borrower shall maintain flood insurance
     coverage on all  insurable  elements of Real  Property  and of all tangible
     Personal Property.

(d)   Business Interruption

     The  Borrower  shall  maintain a form of  business  income  coverage in the
     amount of eighty  percent  (80%) of one  year's  business  income  from the
     Property.

(e)   Comprehensive/General Liability

     The Borrower shall maintain  commercial  general liability  coverage (which
     may be in the  form  of  umbrella/excess  liability  insurance)  with a One
     Million  Dollar  ($1,000,000)  combined  single limit per  occurrence and a
     minimum aggregate limit of Two Million Dollars ($2,000,000).

(f)   Liquor Liability

     The Borrower shall maintain liquor  liability  coverage,  if applicable law
     may  impose  liability  on those  selling,  serving,  or  giving  alcoholic
     beverages to others and if such beverages will be sold,  served or given on
     the Real Property by the Borrower.

(g)   Elective Coverages

     The Lender may require  additional  coverages  appropriate  to the property
     type  and site  location.  Additional  coverages  may  include  earthquake,
     windstorm,  mine  subsidence,  sinkhole,  personal  property,  supplemental
     liability, or coverages of other property-specific risks.

(h)   Waiver of Earthquake Coverage Requirement

     The Lender agrees that no earthquake  coverage shall be required unless the
     Real  Property is now or in the future  located in a Seismic Zone IV or its
     equivalent,  that is, a zone where  major  damage  may  occur,  and that is
     adjacent to a major fault  system.  If such a requirement  is imposed,  the
     Borrower  may at its  expense  obtain a  study,  prepared  by a  consultant
     approved in advance by the Lender,  opining that the probable  maximum loss
     in the event of an earthquake would be less than twenty-five  percent (25%)
     of the value of the Real Property. If such a study is obtained,  the Lender
     will waive its requirement.

<PAGE>

       7.2   PRIMARY COVERAGE

            Each coverage  required  under this Section shall be primary  rather
            than  contributing  or secondary to the coverage  Borrower may carry
            for other  properties  or risks,  provided,  however,  that  blanket
            coverage  shall be acceptable if (a) the policy  includes  limits by
            property location, and (b) the Lender determines, in the exercise of
            its sole and absolute  discretion,  that the amount of such coverage
            is  sufficient  in light of the other risks and  properties  insured
            under the blanket policy.

      7.3 HOW THE LENDER SHALL BE NAMED

            On all property insurance policies and coverages required under this
            Section  (including  coverage against loss of business income),  the
            Lender must be named as "first mortgagee" under a standard mortgagee
            clause. On all liability policies and coverages,  the Lender must be
            named as an  "additional  insured."  The Lender shall be referred to
            verbatim as follows: "Transamerica Occidental Life Insurance Company
            and its successors,  assigns, and affiliates;  as their interest may
            appear;  c/o AEGON USA Realty Advisors,  Inc.;  Mortgage Loan Dept.;
            4333 Edgewood Rd., NE; Cedar Rapids, Iowa 52499-5443."

       7.4   RATING

            Each  insurance  carrier  providing  insurance  required  under this
            Section must have,  independently of its parent's or any reinsurer's
            rating, a General  Policyholder  Rating of A, and a Financial Rating
            of VIII or better,  as reported in the most current  issue of Best's
            Insurance Guide, or as reported by Best on its internet web site.

       7.5   DEDUCTIBLE

            The maximum  deductible on each required coverage or policy is Fifty
            Thousand Dollars ($50,000).

       7.6   NOTICES, CHANGES AND RENEWALS

          All policies must require the  insurance  carrier to give the Lender a
          minimum  of ten  (10)  days'  notice  in the  event  of  modification,
          cancellation  or termination  for non payment of premium and a minimum
          of thirty (30) days' notice of non renewal.  The Borrower shall report
          to the Lender  immediately  any  material  facts known to the Borrower
          that may adversely affect the appropriateness or enforceability of any
          insurance  contract,  including,  without  limitation,  changes in the
          ownership or occupancy  of the Real  Property,  any hazard to the Real
          Property  and any  matters  that may give rise to any claim.  Prior to
          expiration of any policy  required  under this  Section,  the Borrower
          shall provide  either (a) an original or certified copy of the renewed
          policy,  or (b) a  "binder,"  an Acord 28  (real  property),  Acord 27
          (personal  property) or Acord 25 (liability)  certificate,  or another
          document  satisfactory  to the  Lender  conferring  on the  Lender the
          rights  and  privileges  of  mortgagee.  If  the  Borrower  meets  the
          foregoing  requirement  under clause (b),  the Borrower  shall use its
          best efforts to supply an original or  certified  copy of the original
          policy within ninety (90) days, and shall be obligated to do so within
          two hundred forty (240) days.  All binders,  certificates,  documents,
          and original or certified copies of policies must name the Borrower as
          a named insured or as an additional insured, must include the complete
          and accurate property address and must bear the original  signature of
          the issuing insurance agent.

      7.7    UNEARNED PREMIUMS

            If  this  Deed  of  Trust  is  foreclosed,  the  Lender  may  at its
            discretion cancel any of the insurance  policies required under this
            Section and apply any unearned premiums to the Indebtedness.

      7.8    FORCED PLACEMENT OF INSURANCE

            If the  Borrower  fails  to  comply  with the  requirements  of this
            Section,  the Lender may, at its  discretion,  procure any  required
            insurance.  Any premiums paid for such  insurance,  or the allocable
            portion of any premium paid by the Lender under a blanket policy for
            such  insurance,  shall be a demand  obligation  under  this Deed of
            Trust, and any unearned premiums under such insurance shall comprise
            Insurance Proceeds and therefore a portion of the Property.

8.     INSURANCE AND CONDEMNATION PROCEEDS

      8.1    ADJUSTMENT AND COMPROMISE OF CLAIMS AND AWARDS

            The  Borrower  may  settle  any  insurance   claim  or  condemnation
            proceeding if the effect of the casualty or the  condemnation may be
            remedied for Fifty Thousand Dollars  ($50,000) or less. If a greater
            sum is  required,  the  Borrower  may not  settle  any such claim or
            proceeding  without the advance written consent of the Lender.  If a
            Default  exists,  the Borrower may not settle any insurance claim or
            condemnation  proceeding  without the advance written consent of the
            Lender.

      8.2    DIRECT PAYMENT TO THE LENDER OF PROCEEDS

            If the Insurance  Proceeds received in connection with a casualty or
            the  Condemnation  Proceeds  received  in respect of a  condemnation
            exceed Fifty Thousand Dollars  ($50,000),  or if there is a Default,
            then such proceeds shall be paid directly to the Lender.  The Lender
            shall have the right to endorse  instruments which evidence proceeds
            that it is entitled to receive directly.

      8.3    AVAILABILITY TO THE BORROWER OF PROCEEDS

            The Borrower  shall have the right to use the Insurance  Proceeds or
            the  Condemnation  Proceeds to carry out the Restoration of the Real
            Property,  if the amount received is less than Two Hundred  Thousand
            Dollars   ($200,000),   subject  to  the  conditions  set  forth  in
            Subsections 8.4, 8.5, and 8.6 of this Section.

          If the amount received in respect of a casualty or condemnation equals
          or  exceeds  Two  Hundred  Thousand  Dollars  ($200,000),  and  if the
          Loan-to-Value  ratio of the Property on completion  will be sixty-five
          percent (65%) or less,  as determined by the Lender in its  discretion
          based on its  estimate of the market value of the Real  Property,  the
          Lender shall receive such Insurance Proceeds or Condemnation  Proceeds
          directly  and  hold  them in a fund  for  Restoration  subject  to the
          conditions set forth in Subsections 8.4, 8.5, and 8.6 of this Section.
          If the  Lender's  estimate  of the market  value of the Real  Property
          implies a Loan-to-Value  ratio of over sixty-five  percent (65%),  and
          the Borrower  disagrees with the Lender's  estimate,  the Borrower may
          require  that the Lender  engage an  independent  appraiser  (the "Fee
          Appraiser") to prepare and submit to AEGON a full narrative  appraisal
          report  estimating  the  market  value of the Real  Property.  The Fee
          Appraiser  shall  be  certified  in Utah and  shall  be a member  of a
          national appraisal organization that has adopted the Uniform Standards
          of  Professional   Appraisal  Practice  (USPAP)   established  by  the
          Appraisal  Standards  Board  of  the  Appraisal  Foundation.  The  Fee
          Appraiser will be required to use assumptions and limiting  conditions
          established  by the Lender and to prepare the  appraisal in conformity
          with the Lender's Appraisal Guidelines.  For purposes of this Section,
          the independent  appraiser's value conclusion shall be binding on both
          the Lender and the Borrower. The Borrower shall have the right to make
          a prepayment of the Loan, without premium,  sufficient to achieve this
          Loan-to-Value  ratio.  The  independent  fee appraisal shall be at the
          Borrower's  expense,  and the  Borrower  shall  pay to the  Lender  an
          administrative  fee of Two Thousand Five Hundred  Dollars  ($2,500) in
          connection  with its review.  The Lender may require that the Borrower
          deposit Ten Thousand Dollars ($10,000) with the Lender as security for
          these expenses or may pay the fee appraiser's and administrative  fees
          from the proceeds at its sole discretion.

            Unless the Borrower has the right to use the  Insurance  Proceeds or
            the  Condemnation  Proceeds  under the  foregoing  subsections,  the
            Lender may, in its sole and absolute  discretion,  either apply them
            to the Loan balance or disburse  them for the purposes of repair and
            reconstruction,  or to remedy the  effects of the  condemnation.  No
            prepayment  premium will be charged on amounts applied to reduce the
            principal balance of the Loan.

       8.4   CONDITIONS TO AVAILABILITY OF PROCEEDS

            The Lender shall have no obligation to release Insurance Proceeds or
            Condemnation Proceeds to the Borrower,  and may hold such amounts as
            additional  security for the Loan, if (a) a Default exists,  (b) the
            Lender has delivered to the Borrower Notice of any act,  omission or
            circumstance  that  will,  if  uncured,  become a  Default,  and the
            required  cure  has  not  been  effected,  or (c)  if the  Insurance
            Proceeds  or  Condemnation  Proceeds  received by the Lender and any
            other  funds   deposited  by  the  Borrower   with  the  Lender  are
            insufficient,   as  determined  by  the  Lender  in  its  reasonable
            discretion,  to complete the Restoration.  If a Default exists,  the
            Lender may at its sole and absolute  discretion apply such Insurance
            Proceeds  and  Condemnation  Proceeds to the full or partial cure of
            the Default.

       8.5  PERMITTED MEZZANINE FINANCING FOR REBUILDING OR REMEDIATION OF THE
            EFFECT OF TAKING BY EMINENT DOMAIN

            If the Lender reasonably  determines that the Insurance  Proceeds or
            Condemnation   Proceeds   received  in  respect  of  a  casualty  or
            condemnation,  as the case may be, would be  insufficient  to permit
            the Borrower to restore the  Improvements to their condition  before
            the  casualty,  or to remedy the effect on the Real  Property of the
            condemnation,  then the  Borrower  shall use  reasonable  efforts to
            secure  such  additional  funds  as  are  necessary  to  effect  the
            Restoration.
<PAGE>

            The Borrower's obligation shall be limited to securing such funds on
            a  nonrecourse  basis.  Interests  in the Borrower may be pledged as
            security  to the  extent  necessary  in  connection  with  any  such
            financing.

      8.6    DRAW REQUIREMENTS

            The Borrower's right to receive Insurance  Proceeds and Condemnation
            Proceeds held by the Lender under this Section shall be  conditioned
            on the Lender's  reasonable approval of plans and specifications for
            the  Restoration.  Each draw shall be in the minimum amount of Fifty
            Thousand  Dollars  ($50,000).  Draw requests shall be accompanied by
            customary evidence of construction  completion,  and by endorsements
            to the Lender's  mortgagee  title  insurance  coverage  insuring the
            absence of construction,  mechanics' or materialmen's  liens.  Draws
            based on partial completion of the Restoration shall be subject to a
            ten percent (10%) holdback. All transactional expenses shall be paid
            by the Borrower.

9.    ESCROW FUND

      The Borrower  shall pay the Monthly  Escrow Payment on the first (1st) day
      of every  month,  commencing  with the month in which  the  first  regular
      payment of  principal  and  interest is due. The Lender shall hold Monthly
      Escrow Payments in a  non-interestbearing  fund from which the Lender will
      pay  on  a  timely  basis  those  Escrow  Expenses  that  the  Lender  has
      anticipated will become payable on a regular basis during the Loan's term,
      and on which  the  Lender  has  based  its  determination  of the  Monthly
      Imposition Requirement,  the Monthly Insurance Premium Requirement and the
      Monthly  Reserve  Requirement.  The Escrow Fund will be  maintained  as an
      accounting  entry  in  the  Lender's  general  account,  where  it  may be
      commingled  with the Lender's  other funds.  The Lender may  reanalyze the
      projected  Escrow Expenses from time to time and shall advise the Borrower
      of any  change  in the  amount of the  Monthly  Escrow  Payment.  Upon the
      foreclosure  of this  Deed of  Trust,  the  delivery  of a deed in lieu of
      foreclosure,  or the payoff of the Loan, the Lender shall apply amounts in
      the Escrow Fund, net of accrued Escrow Expenses, to the Indebtedness.  The
      Lender  shall  remit any  amounts  in excess  of the  Indebtedness  to the
      Borrower.

10.   DEFAULT

      10.1 PAYMENT DEFAULTS

            A "Default" shall exist without Notice upon the occurrence of any of
            the following events:

            (a)    Scheduled Payments
                  The Borrower's failure to pay, or to cause to be paid, (i) any
                  regular  monthly  payment of principal and interest  under the
                  Note, together with any required Monthly Escrow Payment, on or
                  before  the tenth  (10th) day of the month in which it is due,
                  and (ii) any other scheduled payment under the Note, this Deed
                  of Trust or any other Loan Document.

<PAGE>

(b)   Payment at Maturity

          The  Borrower's   failure  to  pay,  or  to  cause  to  be  paid,  the
          Indebtedness  when the Loan matures by acceleration  under Section 16,
          because of a transfer or encumbrance  under Section 13, or by lapse of
          time.

(c)   Demand Obligations

          The Borrower's failure to pay, or to cause to be paid, within five (5)
          Business Days of the Lender's demand,  any other amount required under
          the Note, this Deed of Trust or any of the other Loan Documents.

      10.2 INCURABLE NONMONETARY DEFAULT

            A Default shall exist upon any of the following:

(a)   Material Untruth or Misrepresentation

                  The Lender's  discovery  that any  representation  made by the
                  Borrower  in  any  Loan  Document  was  materially  untrue  or
                  misleading  when  made,  if the  misrepresentation  either was
                  intentional  or is not capable of being cured as  described in
                  Subsection 10.3(a) below.

(b)   Due on Sale or Encumbrance

                  The  occurrence of any sale,  conveyance,  transfer or vesting
                  that would  result in the Loan  becoming  immediately  due and
                  payable at the Lender's option under Section 13.

(c)   Voluntary Bankruptcy Filing

                  The filing by the Borrower of a petition in  bankruptcy or for
                  relief  from  creditors  under any  present or future law that
                  affords general protection from creditors.

(d)   Insolvency

                  The failure of the Borrower generally to pay its debts as they
                  become due, its admission in writing to an inability so to pay
                  its debts, the making by the Borrower of a general  assignment
                  for the benefit of creditors, or a judicial determination that
                  the Borrower is insolvent.

(e)   Receivership

                  The appointment of a receiver or trustee to take possession of
                  any of the assets of the Borrower.

(f)   Levy or Attachment

                  The taking or seizure of any material  portion of the Property
                  under levy of execution or attachment.

(g)   Lien
                  The filing  against the Real  Property of any lien or claim of
                  lien for the  performance  of work or the supply of materials,
                  or the filing of any federal,  state or local tax lien against
                  the  Borrower,  or  against  the  Real  Property,  unless  the
                  Borrower  promptly  complies  with  Section 12 of this Deed of
                  Trust.

<PAGE>


(h) Defaults under other Loan Documents

The  existence  of any  default  under any other  Loan  Document,  provided  any
required  Notice of such default has been given and any  applicable  cure period
has expired.

(i) Dissolution or Liquidation

The Borrower shall initiate or suffer the  commencement  of a proceeding for its
dissolution or liquidation,  and such proceeding  shall not be dismissed  within
thirty (30) days, or the Borrower shall cease to exist as a legal entity (unless
resulting in a Permitted Transfer).

      10.3 CURABLE NON-MONETARY DEFAULT

            A Default shall exist,  following the cure periods  specified below,
            under the following circumstances:

(a)   Unintentional Misrepresentations that are Capable of Being Cured

          A "Default" shall exist, with Notice, if the Lender discovers that the
          Borrower has unintentionally made any material  misrepresentation that
          is capable of being cured,  unless the Borrower promptly commences and
          diligently  pursues a cure of the  misrepresentation  approved  by the
          Lender,  and completes the cure within thirty (30) days. Any such cure
          shall place the Lender in the risk  position  that would have  existed
          had the false representation been true when made.

(b)   Involuntary Bankruptcy or Similar Filing

          The Borrower  becomes the subject of any petition or action seeking to
          adjudicate it bankrupt or insolvent,  or seeking liquidation,  winding
          up, reorganization,  arrangement,  adjustment,  protection, relief, or
          composition  of it or its debts under any law relating to  bankruptcy,
          insolvency  or  reorganization  or  relief,  or that may  result  in a
          composition of its debts, provide for the marshaling of the Borrower's
          assets for the  satisfaction of its debts, or result in the judicially
          ordered sale of the  Borrower's  assets for the purpose of  satisfying
          its obligations to creditors, unless a motion for the dismissal of the
          petition or other  action is filed within ten (10) days and results in
          its dismissal  within sixty (60) days of the filing of the petition or
          other action.

(c)   Entry of a Material Judgment

          Any judgment is entered against the Borrower or any other Obligor, and
          the judgment may  materially  and adversely  affect the value,  use or
          operation  of the Real  Property,  unless the  judgment  is  satisfied
          within fifteen (15) business days.

(d)   Other Defaults

          The  Borrower  fails to observe any  promise or covenant  made in this
          Deed of Trust,  unless  the  failure  results  in a Default  described
          elsewhere in this Section 10,  provided  the Lender  delivers  written
          Notice to the Borrower of the  existence  of such an act,  omission or
          circumstance,  and that such an act,  omission or  circumstance  shall
          constitute  a Default  under the Loan  Documents  unless the  Borrower
          promptly  initiates an effort to cure the potential  Default,  pursues
          the cure  diligently and  continuously,  and succeeds in effecting the
          cure  within one hundred  twenty  (120) days of its receipt of Notice.
          The Lender  shall  afford the  Borrower  an  additional  period of one
          hundred  twenty  (120) days in cases where  construction  or repair is
          needed to cure the potential Default, and the cure cannot be completed
          within the first one hundred twenty (120) day cure period.  During the
          cure  period,  the Borrower  has the  obligation  to provide on demand
          satisfactory   documentation   of  its  effort  to  cure,   and,  upon
          completion,  evidence that the cure has been achieved.  All notice and
          cure  periods  provided in this Deed of Trust  shall run  concurrently
          with any notice or cure periods provided by law.

11.   RIGHT TO CURE

      The Lender shall have the right to cure any Default. The expenses of doing
      so shall be part of the  Indebtedness,  and the Borrower shall pay them to
      the Lender on demand.

12.   CONTEST RIGHTS

      The Borrower may secure the right to contest Impositions and construction,
      mechanics'  or  materialmen's  liens,   through  appropriate   proceedings
      conducted  in good  faith,  by either  (A)  depositing  with the Lender an
      amount equal to one hundred  twenty-five  percent  (125%) of the amount of
      the  Imposition or the lien, or (B) obtaining and  maintaining in effect a
      bond issued by a surety  acceptable  to the Lender,  in an amount equal to
      the amount required by Utah law or by the court in order to obtain a court
      order  staying  the  foreclosure  of the lien  pending  resolution  of the
      dispute,  and  releasing  the lien of record.  The proceeds of such a bond
      must be payable  directly to the Lender.  The surety  issuing  such a bond
      must be acceptable to the Lender in its reasonable discretion.  After such
      a deposit is made or bond issued, the Borrower shall promptly commence the
      contest of the lien and continuously pursue that contest in good faith and
      with  reasonable  diligence.  If the contest of the related  Imposition or
      lien is  unsuccessful,  any deposits or bond proceeds shall be used to pay
      the  Imposition  or to  satisfy  the  obligation  from  which the lien has
      arisen. Any surplus shall be refunded to the Borrower.

13.   DUE ON TRANSFER OR ENCUMBRANCE

      Upon the sale or transfer of any portion of the Real Property or any other
      conveyance,  transfer or vesting of any direct or indirect interest in the
      Borrower or the Property,  including  (i) the direct or indirect  transfer
      of, or the  granting  of a  security  interest  in, the  ownership  of the
      Borrower, (ii) any encumbrance (other than a Permitted Encumbrance) of the
      Real Property (unless the Borrower  contests the encumbrance in compliance
      with Section 12), and (iii) the lease, license or granting of any security
      interest in the Personal Property, the Indebtedness shall, at the Lender's
      option,  become  immediately  due and payable upon Notice to the Borrower,
      unless the sale, conveyance, transfer or vesting is a Permitted Transfer.

<PAGE>

14.   DUE ON SALE  EXCEPTIONS  The  Permitted  Transfers  are  those  stated  in
      Subsections 14.1 through 14.3.

      14.1 PUBLICLY TRADED SHARES OF THE REIT

            The  public  trading of the shares of the REIT on the New York Stock
            Exchange.

      14.2 LIMITED PARTNERSHIP TRANSFERS OF THE CARVEOUT OBLIGOR

            The  transfer  of  limited  partnership  interests  of the  Carveout
            Obligor, provided the REIT maintains direct or indirect ownership of
            more  than  seventy-five  percent  (75%) of the  Carveout  Obligor's
            limited  partnership  interests and the REIT continues to have Legal
            Control of the Borrower.

      14.3 PERMITTED TRANSFERS OF CERTAIN PASSIVE INTERESTS

            A "Qualified  Passive  Interest  Transfer,"  which is defined as any
            transfer  of a direct or  indirect  interest  in the  Borrower,  if,
            following the transfer (i) the Real Property remains under the Legal
            Control of the REIT,  (ii) the transfer does not change the identity
            of any entity  through which the Carveout  Obligor  exercises  Legal
            Control of the Real Property,  and (iii) the Carveout  Obligor meets
            the Net Worth Requirement.

      14.4 TRANSACTION COSTS

            The Borrower shall pay all  out-of-pocket  expenses  incurred by the
            Lender  in  the  review  and  processing  of  a  Permitted  Transfer
            regardless of whether the Permitted Transfer is carried out.

15. NOTICE OF ABSOLUTE ASSIGNMENT OF LEASES AND RENTS

      Under the  Absolute  Assignment  of Leases and  Rents,  the  Borrower  has
      assigned to the Lender,  and to its  successors  and  assigns,  all of the
      Borrower's right and title to, and interest in, the Leases,  including all
      rights  under the Leases and all  benefits  to be derived  from them.  The
      rights  assigned  include  all  authority  of the  Borrower  to  modify or
      terminate Leases,  or to exercise any remedies,  and the benefits assigned
      include all Rents. This assignment is present and absolute,  but under the
      terms of the  Absolute  Assignment  of Leases  and  Rents,  the Lender has
      granted the Borrower a  conditional  license to collect and use the Rents,
      and to  exercise  the rights  assigned,  in a manner  consistent  with the
      Obligations, all as more particularly set forth in the Absolute Assignment
      of Leases and Rents.  The Lender may,  however,  terminate  the license by
      written  Notice to the  Borrower  on certain  conditions  set forth in the
      Absolute Assignment of Leases and Rents.

16.   ACCELERATION

If a Default exists, the Lender may, at its option, declare the unpaid principal
balance of the Note to be immediately due and payable, together with all accrued
interest on the  indebtedness,  all costs of  collection  (including  reasonable
attorneys'  fees and  expenses)  and all other  charges  due and  payable by the
Borrower under the Note or any other Loan Document.  If the subject  Default has
arisen  from a failure  by the  Borrower  to make a regular  monthly  payment of
principal and interest,  the Lender shall not accelerate the indebtedness unless
the Lender  shall have  given the  Borrower  at least  three (3)  Business  Days
advance  notice of its intent to do so. If the  subject  Default is curable  and
nonmonetary in nature,  the Lender shall exercise its option to accelerate  only
by  delivering  notice of  acceleration  to the  Borrower.  The Lender shall not
deliver any such notice of acceleration  until (a) the Borrower has received any
required notice of the prospective  Default,  and (b) any applicable cure period
has  expired.  Except  as  expressly  described  in this  Section,  no notice of
acceleration shall be required in order for the Lender to exercise its option to
accelerate the indebtedness in the event of Default.

17. RIGHTS OF ENTRY AND TO OPERATE

       17.1 ENTRY ON REAL PROPERTY

            If a Default exists, the Lender may, to the extent permitted by law,
            enter upon the Real  Property and take  exclusive  possession of the
            Real Property and of all books,  records and  accounts,  all without
            Notice and  without  being  guilty of  trespass,  but subject to the
            rights of tenants in  possession  under the Leases.  If the Borrower
            remains  in  possession  of all or any  part of the  Property  after
            Default and without the Lender's prior written  consent,  the Lender
            may,  without  Notice  to the  Borrower,  invoke  any and all  legal
            remedies to dispossess the Borrower.

      17.2 OPERATION OF REAL PROPERTY

            Following Default,  the Lender may hold, lease,  manage,  operate or
            otherwise use or permit the use of the Real Property,  either itself
            or by other  persons,  firms or entities,  in such manner,  for such
            time and upon such other  terms as the Lender may deem to be prudent
            under the circumstances (making such repairs, alterations, additions
            and  improvements  thereto and taking any and all other  action with
            reference thereto,  from time to time, as the Lender deems prudent),
            and apply all Rents and other  amounts  collected  by the  Lender in
            accordance with the provisions of the Absolute  Assignment of Leases
            and Rents.

18.   RECEIVERSHIP

      Following  Default,   the  Lender  may  apply  to  a  court  of  competent
      jurisdiction  for the appointment of a receiver of the Property,  ex parte
      without  Notice to the Borrower,  whether or not the value of the Property
      exceeds the  Indebtedness,  whether or not waste or  deterioration  of the
      Real Property has occurred,  and whether or not other  arguments  based on
      equity  would  justify the  appointment.  The Borrower  irrevocably,  with
      knowledge and for valuable consideration, consents to such an appointment.
      Any such receiver shall have all the rights and powers  customarily  given
      to  receivers  in Utah,  including  the rights  and powers  granted to the
      Lender by this Deed of Trust, the power to maintain, lease and operate the
      Real Property on terms approved by the court, and the power to collect the
      Rents and apply them to the  Indebtedness  or  otherwise  as the court may
      direct.  Once  appointed,  a receiver may at the Lender's option remain in
      place until the Indebtedness has been paid in full.

<PAGE>

19.   FORECLOSURE; POWER OF SALE
      Upon Default,  the Lender may immediately proceed to foreclose the lien of
      this Deed of Trust,  against all or part of the  Property,  or to sell the
      Property by judicial or  nonjudicial  foreclosure  in accordance  with the
      laws of Utah and may  pursue  any other  remedy  available  to  commercial
      mortgage lenders under the laws of Utah.

20.   WAIVERS

      To the maximum  extent  permitted  by law, the  Borrower  irrevocably  and
      unconditionally  WAIVES and RELEASES  any present or future  rights (a) of
      reinstatement  or  redemption,  (b) that may exempt the Property  from any
      civil  process,  (c) to appraisal or  valuation  of the  Property,  (d) to
      extension of time for payment, (e) that may subj ect the Lender's exercise
      of its remedies to the  administration  of any decedent's estate or to any
      partition or liquidation action, (f) to any homestead and exemption rights
      provided by the  Constitution  and laws of the United  States and of Utah,
      (g) to notice of  acceleration  or notice of intent to  accelerate  (other
      than as expressly  stated herein),  and (h) that in any way would delay or
      defeat the right of the Lender to cause the sale of the Real  Property for
      the purpose of satisfying the  Indebtedness.  The Borrower agrees that the
      price  paid at a lawful  foreclosure  sale,  whether by the Lender or by a
      third party, and whether paid through  cancellation of all or a portion of
      the Indebtedness or in cash, shall conclusively establish the value of the
      Real Property.

      The  foregoing  waivers  shall  apply to and bind any party  assuming  the
      Obligations of the Borrower under this Deed of Trust.

21.   EXCULPATION CLAUSE AND CARVEOUT OBLIGATIONS

      The Lender agrees that it shall not seek to enforce any monetary  judgment
      with  respect  to the  Indebtedness  evidenced  by the  Note  against  the
      Borrower  except through  recourse to the Property,  unless the Obligation
      from which the  judgment  arises is a Carveout  Obligation.  The  Carveout
      Obligations  include  (a) the  obligation  to  repay  any  portion  of the
      Indebtedness that arises because the Lender has advanced funds or incurred
      expenses as a result of any of the "Carveouts" (as defined below), (b) the
      obligation to repay the entire  Indebtedness,  if the Lender's exculpation
      of the Borrower from personal liability under this Section has become void
      as set forth below,  (c) the obligation to indemnify the Lender in respect
      of its actual damages suffered in connection with a Carveout,  and (d) the
      obligation  to defend and hold the Lender  harmless  from and  against any
      claims,  judgments,  causes  of  action  or  proceedings  arising  from  a
      Carveout. The Carveouts are:

(i)               fraud or material written misrepresentation;

(ii)              waste of the Property (which shall include damage, destruction
                  or disrepair of the Real  Property  caused by a willful act or
                  grossly negligent omission of the Borrower,  but shall exclude
                  ordinary wear and tear in the absence of gross negligence);

(iii)             misappropriation   of  tenant  security  deposits   (including
                  proceeds of tenant letters of credit),  Insurance  Proceeds or
                  Condemnation Proceeds;

(iv)             failure to pay property taxes, assessments or other lienable
                 Impositions;

(v)               failure to pay to the Lender  all  Rents,  income and  profits
                  (including  any rent collected more than one month in advance,
                  or any rent for the last  month of the lease  term,  under any
                  Lease in force at the time of Default),  net of reasonable and
                  customary operating expenses,  received in respect of a period
                  when the Loan is in Default;

(vi)              removal  from  the  Real  Property  of  Fixtures  or  Personal
                  Property, unless replaced in a commercially reasonable manner;
(vii)             the  out-of-pocket  expenses of enforcing  the Loan  Documents
                  following  Default,  not including expenses incurred after the
                  Borrower has agreed in writing to transfer  the Real  Property
                  to the Lender by the Lender's  choice of either an uncontested
                  foreclosure or delivery of a deed in lieu of foreclosure;

(viii)            terminating  or  amending  a Lease  in  violation  of the Loan
                  Documents;  and (ix) any  liability of the Borrower  under the
                  Environmental Indemnity Agreement.

      The Lender's  exculpation of the Borrower from personal  liability for the
      repayment of the Indebtedness  evidenced by the Note shall be void without
      Notice if the Borrower (A) voluntarily  transfers or creates any voluntary
      lien on the Property in violation  of the Loan  Documents,  or (B) files a
      voluntary petition for reorganization  under Title 11 of the United States
      Code (or under any other  present  or future  law,  domestic  or  foreign,
      relating  to  bankruptcy,   insolvency,   reorganization   proceedings  or
      otherwise  similarly  affecting  the  rights  of  creditors),  and has not
      offered,  prior to the filing, to enter into the Lender's choice of either
      an  agreement  to permit an  uncontested  foreclosure,  or an agreement to
      deliver  a deed in lieu  of  foreclosure  within  sixty  (60)  days of the
      Lender's  acceptance of the offer. After the Lender accepts such an offer,
      default by the  Borrower in  fulfilling  the terms of the  accepted  offer
      shall  trigger  personal  liability for the entire  Indebtedness.  No such
      offer shall be conditioned on any payment by the Lender, on the release of
      any Obligor from any Obligation, or on any other concession.


22. SECURITY AGREEMENT AND FIXTURE FILING

      22.1 DEFINITIONS

            "Account" shall have the definition assigned in the UCC.

            "Account   Collateral"  means  all  Accounts  that  arise  from  the
            operation,  use or enjoyment of the Property,  from the commencement
            of the Loan term through the satisfaction of all of the Obligations.
            "Bank"  shall  have the  definition  assigned  in the UCC.  "Chattel
            Paper" shall have the definition assigned in the UCC.

            "Chattel Paper  Collateral" means all Chattel Paper arising from the
            sale or other disposition of all or part of the Property.

           "Deposit Account" shall have the definition assigned in the UCC.

            "Deposit  Account  Collateral"  means all the Deposit  Accounts into
            which  Rents  or  Proceeds  are  deposited  at  any  time  from  the
            commencement of the Loan term through the satisfaction of all of the
            Obligations.

            "Document" shall have the definition assigned in the UCC.

            "Document Collateral" means all Documents that evidence title to all
            or any part of the Goods Collateral.

            "Equipment" shall have the definition assigned in the UCC.

            "Equipment  Collateral" means all Equipment that relates to the Real
            Property  and is used  in the  operation  of the  Real  Property  as
            commercial real estate.
            "Financing  Statements"  shall have the  definition  assigned in the
            UCC. "General Intangibles" shall have the definition assigned in the
            UCC.

            "General  Intangible  Collateral" means all General Intangibles that
            have  arisen  or that  arise in the  future in  connection  with the
            Borrower's ownership,  operation or leasing of the Real Property, at
            any  time  from  the  commencement  of the  Loan  term  through  the
            satisfaction of all of the Obligations.

            "Goods"  shall  have the  definition  assigned  in the UCC.  "Goods"
            include all detached  Fixtures,  items of Personal Property that may
            become Fixtures,  property  management  files,  accounting books and
            records,  reports of consultants relating to the Real Property, site
            plans, test borings,  environmental or geotechnical surveys, samples
            and test results,  blueprints,  construction and shop drawings,  and
            plans and specifications.

            "Goods  Collateral" means all Goods that relate to the Real Property
            and are used in the  operation  of the Real  Property as  commercial
            real estate.

            "Instrument" shall have the definition assigned in the UCC.

            "Instrument  Collateral" means all Instruments  received as Rents or
            Proceeds or purchased by the Borrower with Rents or Proceeds.

            "Investment Property" shall have the definition assigned in the UCC.

            "Investment  Property  Collateral" means all the Investment Property
            purchased using Rents or Proceeds, or received in respect of Account
            Collateral.

            "Letter of Credit" shall have the definition assigned in the UCC.

            "Letter  of Credit  Collateral"  means all  Letters  of Credit  that
            relate to the use, operation or enjoyment of the Property, including
            those that secure the  payment of any  Accounts  comprising  Account
            Collateral or arising from the sale or other  disposition  of all or
            part of the Property.

            "Letter of Credit Rights" shall have the definition  assigned in the
             UCC.

            "Letter  of Credit  Rights  Collateral"  means all  Letter of Credit
            Rights  that  relate  to the  use,  operation  or  enjoyment  of the
            Property,  including  rights to  Letters of Credit  that  secure the
            payment of any Accounts  comprising  Account  Collateral  or arising
            from the sale or other disposition of all or part of the Property.

            "Money Collateral" means all money received in respect of Rents.

            "Personal   Property"  means  Account   Collateral,   Chattel  Paper
            Collateral,   Commercial  Tort  Claim  Collateral,  Deposit  Account
            Collateral,  Document  Collateral,   Equipment  Collateral,  General
            Intangibles,  Goods Collateral,  Instrument  Collateral,  Investment
            Property Collateral, Letter of Credit Rights Collateral,  Letters of
            Credit Collateral, and Money Collateral.

            "Proceeds" shall have the definition assigned in the UCC.

            "UCC" means the Uniform Commercial Code as adopted in Utah.

      22.2 CREATION OF SECURITY INTEREST

            This Deed of Trust shall be  self-operative  and shall  constitute a
            Security  Agreement  pursuant  to the  provisions  of the  UCC  with
            respect to the Personal Property.  The Borrower,  as debtor,  hereby
            grants the Lender, as secured party, for the purpose of securing the
            Indebtedness, a security interest in the Account Collateral, Chattel
            Paper Collateral,  Commercial Tort Claim Collateral, Deposit Account
            Collateral,  Document  Collateral,  General  Intangible  Collateral,
            Goods  Collateral,   Instrument   Collateral,   Investment  Property
            Collateral,  Letter of Credit  Rights  Collateral,  Letter of Credit
            Collateral,  and Money  Collateral,  in the  accessions,  additions,
            replacements,  substitutions  and  Proceeds of any of the  foregoing
            items of collateral.  Upon Default, the Lender shall have the rights
            and  remedies of a secured  party under the UCC as well as all other
            rights  and  remedies  available  at law or in equity,  and,  at the
            Lender's  option,  the Lender may also invoke the remedies  provided
            elsewhere  in this Deed of Trust as to such  Property.  The Borrower
            and the  Lender  agree  that the  rights  granted  to the  Lender as
            secured party under this Section 22 are in addition to rather than a
            limitation  on any of the  Lender's  other rights under this Deed of
            Trust with respect to the Property.

      22.3 FILING AUTHORIZATION

            The  Borrower  irrevocably  authorizes  the  Lender to file,  in the
            appropriate locations for filings of UCC financing statements in any
            jurisdictions  as the Lender in good faith deems  appropriate,  such
            financing  statements  and  amendments  as the Lender may require in
            order to perfect or continue this security interest,  or in order to
            prevent any filed  financing  statement from becoming  misleading or
            from losing its perfected status.

<PAGE>


      22.4 ADDITIONAL SEARCHES AND DOCUMENTATION

            Borrower shall provide to Lender upon request,  certified  copies of
            any  searches of UCC records  deemed  necessary  or  appropriate  by
            Lender to confirm the first priority status of its security interest
            in the Personal  Property,  together with copies of all documents or
            records evidencing security interests disclosed by such searches.

      22.5 COSTS

            The Borrower  shall pay all filing fees and costs and all reasonable
            costs and expenses of any record  searches (or their  continuations)
            as the Lender may require.

      22.6 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER

(a)   Ownership of the Personal Property

                  All of the Personal  Property is, and shall during the term of
                  the Loan continue to be, owned by the Borrower, and is not the
                  subject  matter  of any  lease,  control  agreement  or  other
                  instrument,  agreement or  transaction  whereby any ownership,
                  security or  beneficial  interest in the Personal  Property is
                  held by any person or entity other than the Borrower,  subject
                  only to (1) the Lender's security interest,  (2) the rights of
                  tenants  occupying the Property pursuant to Leases approved by
                  the Lender, and (3) the Permitted Encumbrances.

(b)   No Other Identity

                  The Borrower represents and warrants that the Borrower has not
                  used or operated under any other name or identity for at least
                  five  (5)  years.  The  Borrower  covenants  and  agrees  that
                  Borrower will furnish  Lender with notice of any change in its
                  name, form of  organization,  or state of organization  within
                  thirty  (30)  days  prior  to the  effective  date of any such
                  change.

(c) Location of Equipment All Equipment Collateral is located upon the Land.

(d)   Removal of Goods

                  The Borrower  will not remove or permit to be removed any item
                  included  in the Goods  Collateral  from the Land,  unless the
                  same  is  replaced   immediately   with   unencumbered   Goods
                  Collateral  (1) of a quality  and value  equal or  superior to
                  that which it replaces,  and (2) which is located on the Land.
                  All such  replacements,  renewals,  and additions shall become
                  and be  immediately  subject to the security  interest of this
                  Deed of Trust.

(e)   Proceeds

               The Borrower may,  without the Lender's  prior  written  consent,
               dispose of Goods  Collateral in the ordinary  course of business,
               provided that,  following the disposition,  the perfection of the
               Lender's  security  interest in the  Proceeds of the  disposition
               will continue  under ss. 9-315 (d) of the UCC. The Borrower shall
               not, without the Lender's prior written  consent,  dispose of any
               Personal Property in any other manner,  except in compliance with
               Subsection 22.6(d) above.

      22.7 FIXTURE FILING

            This Deed of Trust  constitutes  a  financing  statement  filed as a
            fixture  filing in the  Official  Records of the County  Recorder of
            Salt  Lake  County,  Utah,  with  respect  to any and  all  fixtures
            comprising   Property.   The   "debtor"  is   Consolidated   Capital
            Institutional  Properties/3,  a limited partnership  organized under
            California law, the "secured party" is Transamerica  Occidental Life
            Insurance  Company,  an  Iowa  corporation,  the  collateral  is  as
            described in Subsection  22.1 above and the granting  clause of this
            Deed of Trust, and the addresses of the debtor and secured party are
            the addresses  stated in Subsection  26.13 of this Deed of Trust for
            Notices to such parties. The organizational identification number of
            the debtor is 841750635. The owner of record of the Real Property is
            Consolidated Capital Institutional Properties/3.

23. ENVIRONMENTAL MATTERS

      23.1 REPRESENTATIONS

            The Borrower represents as follows:
(a)   No Hazardous Substances

                  To the  best  of  the  Borrower's  knowledge,  and  except  as
                  disclosed  in the ESA, no release of any  Hazardous  Substance
                  has occurred on or about the Real Property in a quantity or at
                  a concentration level that (i) violates any Environmental Law,
                  or (ii) requires reporting to any regulatory  authority or may
                  result in any obligation to remediate under any  Environmental
                  Law.

(b)   Compliance with Environmental Laws

                  To the best of Borrower's knowledge, the Real Property and its
                  current  use and  presently  anticipated  uses comply with all
                  Environmental   Laws,   including  those  requiring   permits,
                  licenses, authorizations, and other consents and approvals.

(c)   No Actions or Proceedings

                  To the best of Borrower's knowledge, no governmental authority
                  or  agency   has   commenced   any   action,   proceeding   or
                  investigation  based on any  suspected or actual  violation of
                  any  Environmental  Law on or about the Real Property.  To the
                  best of the Borrower's  knowledge as a duly diligent  property
                  owner,  no such authority or agency has threatened to commence
                  any such action, proceeding, or investigation.

      23.2 ENVIRONMENTAL COVENANTS

            The Borrower covenants as follows:

          (a)  Compliance with  Environmental  Laws The Borrower shall,  and the
               Borrower  shall cause all  employees,  agents,  contractors,  and
               tenants  of the  Borrower  and any other  persons  present  on or
               occupying  the  Real  Property  to,  keep and  maintain  the Real
               Property in compliance with all Environmental Laws.

            (b)    Notices, Actions and Claims

                  The Borrower shall immediately advise the Lender in writing of
                  (i) any notices from any  governmental  or  quasi-governmental
                  agency or authority of violation or potential violation of any
                  Environmental  Law received by the Borrower,  (ii) any and all
                  enforcement,   cleanup,   removal  or  other  governmental  or
                  regulatory   actions   instituted,   completed  or  threatened
                  pursuant to any  Environmental  Law,  (iii) all claims made or
                  threatened by any third party against the Borrower or the Real
                  Property  relating  to damage,  contribution,  cost  recovery,
                  compensation,  loss or  injury  resulting  from any  Hazardous
                  Substances,   and  (iv)  discovery  by  the  Borrower  of  any
                  occurrence or condition on any real  property  adjoining or in
                  the vicinity of the Real  Property  that creates a foreseeable
                  risk  of  contamination  of  the  Real  Property  by  or  with
                  Hazardous Substances.

      23.3 THE LENDER'S RIGHT TO CONTROL CLAIMS

            The Lender shall have the right (but not the obligation) to join and
            participate in, as a party if it so elects, any legal proceedings or
            actions initiated in connection with any Hazardous Substances and to
            have its related and  reasonable  attorneys' and  consultants'  fees
            paid by the Borrower upon demand.

      23.4 INDEMNIFICATION

          The Borrower  shall be solely  responsible  for, and shall  indemnify,
          defend,  and  hold  harmless  the  Lender,  the  Trustee,   and  their
          respective  directors,  officers,  employees,  agents,  successors and
          assigns, from and against, any claim, judgment,  loss, damage, demand,
          cost,  expense or  liability  of  whatever  kind or  nature,  known or
          unknown,  contingent or otherwise,  directly or indirectly arising out
          of  or  attributable  to  the  use,  generation,   storage,   release,
          threatened release, discharge, disposal, or presence (whether prior to
          or after the date of this Deed of Trust) of Hazardous  Substances  on,
          in,  under or about the Real  Property  (whether  by the  Borrower,  a
          predecessor in title, any tenant, or any employees, agents, contractor
          or  subcontractors of any of the foregoing or any third persons at any
          time  occupying  or  present  on the Real  Property),  including:  (i)
          personal  injury;  (ii)  death;  (iii)  damage to  property;  (iv) all
          consequential  damages;  (v) the  cost of any  required  or  necessary
          repair, cleanup or detoxification of the Real Property,  including the
          soil and ground water thereof,  and the preparation and implementation
          of any closure,  remedial or other required plans;  (vi) damage to any
          natural  resources;  and  (vii)  all  reasonable  costs  and  expenses
          incurred by the Lender or the Trustee in  connection  with clauses (i)
          through (vi), including  reasonable  attorneys' and consultants' fees;
          provided,  however,  that nothing  contained in this Section  shall be
          deemed to preclude the Borrower from seeking  indemnification from, or
          otherwise  proceeding against, any third party including any tenant or
          predecessor in title to the Real Property,  and further  provided that
          this indemnification will not extend to matters caused by the Lender's
          gross negligence or willful  misconduct,  or arising from a release of
          Hazardous   Substances   which  occurs  after  the  Lender  has  taken
          possession  of the  Real  Property,  so long as the  Borrower  has not
          caused  the  release  through  any  act or  omission.  The  covenants,
          agreements, and indemnities set forth in this Section shall be binding
          upon the Borrower and its heirs, personal representatives,  successors
          and  assigns,   and  shall  survive  repayment  of  the  Indebtedness,
          foreclosure  of the Real Property,  and the  Borrower's  granting of a
          deed to the Real Property in lieu of foreclosure. Payment shall not be
          a  condition  precedent  to this  indemnity.  Any  costs  or  expenses
          incurred  by the  Lender or the  Trustee  for which  the  Borrower  is
          responsible or for which the Borrower has indemnified the Lender shall
          be paid to the Lender on demand,  with  interest at the rate  provided
          for in the Note from the date  incurred  by the  Lender  until paid in
          full,  and shall be secured by this Deed of Trust.  Without  the prior
          written  consent of the Lender,  the Borrower shall not enter into any
          settlement  agreement,  consent decree, or other compromise in respect
          to any claims relating to Hazardous Substances. The Lender agrees that
          it shall not  unreasonably  delay  its  consideration  of any  written
          request  for its  consent to any such  settlement  agreement,  consent
          decree,  or other compromise once all information,  reports,  studies,
          audits,  and other  documentation  have been  submitted to the Lender.
          23.5 ENVIRONMENTAL AUDITS

            If a Default exists, or at any time the Lender has reason to believe
            that a release of Hazardous  Substances  may have occurred or may be
            likely to occur, the Lender may require that the Borrower retain, or
            the Lender may retain directly,  at the sole cost and expense of the
            Borrower,   a  licensed  geologist,   industrial   hygienist  or  an
            environmental  consultant  acceptable  to the  Lender to  conduct an
            environmental assessment or audit of the Real Property. In the event
            that the Lender makes a reasonable  determination of the need for an
            environmental  assessment  or audit,  the  Lender  shall  inform the
            Borrower in writing that such a determination  has been made and, if
            requested  to do so by the  Borrower,  give the  Borrower  a written
            explanation of that determination  before the assessment or audit is
            conducted.  The  Borrower  shall  afford  any person  conducting  an
            environmental  assessment  or audit access to the Real  Property and
            all materials reasonably requested, subject to the rights of tenants
            in  possession.  The  Borrower  shall  pay on  demand  the  cost and
            expenses of any environmental consultant engaged by the Lender under
            this Subsection.  The Borrower shall, at the Lender's request and at
            the Borrower's sole cost and expense,  take such  investigative  and
            remedial  measures   determined  by  the  geologist,   hygienist  or
            consultant  to be necessary to address any  condition  discovered by
            the  assessment or audit so that (i) the Real  Property  shall be in
            compliance  with all  Environmental  Laws, (ii) the condition of the
            Real Property shall not constitute  any  identifiable  risk to human
            health  or to the  environment,  and  (iii)  the  value  of the Real
            Property  shall  not  be  affected  by  the  presence  of  Hazardous
            Substances.



24. CONCERNING THE TRUSTEE

      24.1 NO LIABILITY

          If the  Trustee  or anyone  acting by virtue of the  Trustee's  powers
          enters the Real  Property,  the Trustee will not be personally  liable
          for debts  contracted  or for  liability  or damages  incurred  in the
          management  or operation of the Real  Property.  The Trustee will have
          the right to rely on any instrument, document or signature authorizing
          or supporting  any action taken or proposed to be taken by the Trustee
          or believed  by the  Trustee in good faith to be genuine.  The Trustee
          will be entitled to reimbursement  for expenses  actually  incurred by
          the  Trustee  in  the  performance  of  the  Trustee's  duties  and to
          reasonable  compensation  for services  rendered.  The Borrower shall,
          from time to time, pay compensation due the Trustee under this Deed of
          Trust and  reimburse  the  Trustee  for and save and hold the  Trustee
          harmless from and against any and all loss,  cost,  liability,  damage
          and expense  whatsoever  incurred by the Trustee in the performance of
          the Trustee's duties. 24.2 RETENTION OF MONEY

            All money  received by the Trustee must,  until used or applied,  be
            held in trust for the purposes for which it was  received,  but need
            not be  segregated in any manner from any other money (except to the
            extent  required by law) and the Trustee will have no liability  for
            interest on any money received.

      24.3 SUCCESSOR TRUSTEES

            The  Trustee  may  resign by giving  notice of such  resignation  in
            writing to the Lender.  If the Trustee's legal existence shall cease
            or if the Trustee resigns or becomes disqualified from acting in the
            execution  of this Trust or fails or refuses  to  exercise  the same
            when  requested  by the  Lender  so to do or if for any  reason  and
            without cause the Lender prefers to appoint a substitute  trustee to
            act  instead of the  original  Trustee,  or any prior  successor  or
            substitute  trustee,  the  Lender  will have full power to appoint a
            substitute trustee and, if preferred, several substitute trustees in
            succession who shall succeed to all the estates,  rights, powers and
            duties of the Trustee.

      24.4 SUCCESSION INSTRUMENTS

            Any new Trustee  appointed  will,  without any further act,  deed or
            conveyance, become vested with all the estates, properties,  rights,
            powers and trusts of the  Trustee's  predecessor.  Upon the  written
            request  of the  Lender  or of any  successor  trustee,  the  former
            Trustee shall execute and deliver an instrument transferring to such
            successor Trustee all the estates,  properties,  rights,  powers and
            trusts of the former  Trustee,  and shall duly assign,  transfer and
            deliver any of the property and money held by the former  Trustee to
            the successor Trustee so appointed in the former Trustee's place.

      24.5 PERFORMANCE OF DUTIES BY AGENTS

            The  Trustee  may  authorize  one  or  more  parties  to  act on the
            Trustee's  behalf to perform the  Trustee's  ministerial  functions,
            including,  without  limitation,  the transmittal and posting of any
            notices.



25. SECONDARY MARKET

      25.1 DISSEMINATION OF INFORMATION

          In  connection  with any transfer of the Loan,  the Lender may forward
          all  documents  and  information  that the Lender  deems  necessary or
          desirable  concerning the Loan,  including the financial statements of
          any Obligor,  and such other information as may be reasonably  related
          to the Obligors, the Property or the Leases to any:

(a)               transferee or prospective transferee of the Loan;

(b)               Rating Agency rating the Loan, a Participation, or Securities;
                  or

(c)               purchaser,   transferee,   assignee,  servicer,   participant,
                  investor in any Securitization  and each prospective  investor
                  and the advisor of each of the  foregoing,  all  documents and
                  information  which  Lender  now has or may  hereafter  acquire
                  relating to the Loan, to any Obligor and to the Real Property,
                  as Lender determines necessary or desirable.

            The Borrower irrevocably waives any and all rights it may have under
            applicable Legal Requirements to prohibit such disclosure, including
            any right of privacy.

      25.2 COOPERATION

            The  Borrower,  any  guarantor  and any  Carveout  Obligor  agree to
            reasonably cooperate at no cost to Borrower or Carveout Obligor with
            the  Lender  in  connection  with  any  transfer  of the Loan or any
            Participation  or Securities.  The Borrower agrees to provide to the
            Lender or to any  persons to whom the Lender  may  disseminate  such
            information,  at  the  Lender's  request,  financial  statements  of
            Obligors, an estoppel certificate and such other documents as may be
            reasonably related to the Obligors, the Property, or the Leases

      25.3 ADDITIONAL FINANCIAL INFORMATION

            If a decision  is made to include the Loan in a  Securitization  and
            the  amount of the Loan would  exceed  twenty  percent  (20%) of the
            amount  estimated  in good faith to be raised in the  offering,  the
            Borrower agrees to provide, to the extent required by SEC Regulation
            S-X Rule 3-14, and to the extent not previously  supplied to Lender,
            financial  statements  for the Real Property in respect of the three
            (3) years  prior to the  Securitization.  If the  amount of the Loan
            would exceed ten percent (10%) (but not twenty percent (20%)) of the
            amount  estimated  in good faith to be raised by the  offering,  the
            Borrower   agrees  to  provide  such   additional   property-related
            financial  information  as the Lender  may  request in order to meet
            then-applicable SEC rules in connection with the contemplated manner
            of the offering.

      25.4 RESERVES/ ESCROWS

            If  Participations  are granted or  Securities  issued in connection
            with the Loan, all funds held by the Lender in escrow or as reserves
            in  accordance   with  the  Loan  Documents  may,  at  the  Lender's
            discretion,   be  deposited  in  "eligible  accounts"  at  "eligible
            institutions"  and  invested  in  "permitted  investments"  as  then
            defined and required by the Rating Agencies.
<PAGE>

26. MISCELLANEOUS

      26.1 SUCCESSORS AND ASSIGNS

            All of the terms of the Loan  Documents  shall  apply to, be binding
            upon   and   inure   to  the   benefit   of  the   heirs,   personal
            representatives,  successors and assigns of the Obligors,  or to the
            holder of the Note, as the case may be.

      26.2 SURVIVAL OF OBLIGATIONS

            Each and all of the  Obligations  shall  continue  in full force and
            effect  until the latest of (a) the date the  Indebtedness  has been
            paid in full and the  Obligations  have been performed and satisfied
            in full,  (b) the last date  permitted by law for bringing any claim
            or action  with  respect  to which the  Lender  may seek  payment or
            indemnification  in connection with the Loan Documents,  and (c) the
            date on which any claim or action for which the Lender seeks payment
            or indemnification is fully and finally resolved and, if applicable,
            any compromise thereof of judgment or award thereon is paid in full.

      26.3 FURTHER ASSURANCES

            The Borrower,  upon the request of the Lender or the Trustee,  shall
            complete,  execute,  acknowledge,  deliver  and  record or file such
            further  instruments  and do such further acts as may be  reasonably
            necessary to carry out more effectively the purposes of this Deed of
            Trust,  to subject any property  intended to be covered by this Deed
            of Trust to the liens and security  interests  it creates,  to place
            third parties on notice of those liens and security interests, or to
            correct any defects which may be found in any Loan Document.

      26.4 RIGHT OF INSPECTION

            The Lender shall have the right from time to time,  upon  reasonable
            advance  notice to the Borrower and subject to the rights of tenants
            in  possession,  to enter onto the Real  Property for the purpose of
            inspecting  and  reporting  on its physical  condition,  tenancy and
            operations.

      26.5 EXPENSE INDEMNIFICATION

          The  Borrower  shall pay all filing and  recording  fees,  documentary
          stamps,  intangible  taxes, and all expenses incident to the execution
          and acknowledgment of this Deed of Trust, the Note or any of the other
          Loan Documents, any supplements, amendments, renewals or extensions of
          any of them, or any instrument entered into under Subsection 26.3. The
          Borrower shall pay or reimburse the Lender, upon demand, for all costs
          and  expenses,  including  appraisal  and  reappraisal  costs  of  the
          Property and reasonable  attorneys' and legal  assistants' fees, which
          the Lender may incur in connection with enforcement  proceedings under
          the  Note,  this Deed of Trust,  or any of the  other  Loan  Documents
          (including  all fees and costs incurred in enforcing or protecting the
          Note,  this Deed of Trust,  or any of the other Loan  Documents in any
          bankruptcy  proceeding),  and  attorneys' and legal  assistants'  fees
          incurred by the Lender in any other suit, action,  legal proceeding or
          dispute  of any kind in which the Lender is made a party or appears as
          party plaintiff or defendant,  affecting the  Indebtedness,  the Note,
          this Deed of Trust, any of the other Loan Documents,  or the Property,
          or required to protect or sustain the lien of this Deed of Trust.  The
          Borrower  shall be obligated  to pay (or to reimburse  the Lender) for
          such fees,  costs and expenses and shall indemnify and hold the Lender
          and the Trustee  harmless  from and  against  any and all loss,  cost,
          expense,  liability, damage and claims and causes of action, including
          attorneys'  fees,  incurred or  accruing  by reason of the  Borrower's
          failure to promptly  repay any such fees,  costs and expenses.  If any
          suit or action is brought to enforce or interpret  any of the terms of
          this Deed of Trust  (including  any  effort  to  modify or vacate  any
          automatic stay or injunction,  any trial, any appeal, any petition for
          review or any bankruptcy proceeding),  the Lender shall be entitled to
          recover all expenses  reasonably incurred in preparation for or during
          the suit or action or in  connection  with any  appeal of the  related
          decision,  whether or not  taxable  as costs.  Such  expenses  include
          reasonable  attorneys'  fees,  witness  fees  (expert  or  otherwise),
          deposition costs,  copying charges and other expenses.  Whether or not
          any court action is involved,  all reasonable expenses,  including the
          costs of  searching  records,  obtaining  title  reports,  appraisals,
          environmental assessments,  surveying costs, title insurance premiums,
          trustee fees, and other reasonable  attorneys'  fees,  incurred by the
          Lender that are necessary at any time in the Lender's  opinion for the
          protection of its interest or enforcement of its rights shall become a
          part of the  Indebtedness  payable on demand  and shall bear  interest
          from the date of  expenditure  until  repaid at the  interest  rate as
          provided in the Note.

26.6 GENERAL INDEMNIFICATION

            The Borrower shall  indemnify,  defend and hold the Lender  harmless
            against: (i) any and all claims for brokerage,  leasing, finder's or
            similar fees which may be made  relating to the Real Property or the
            Indebtedness, and (ii) any and all liability,  obligations,  losses,
            damages,  penalties,  claims,  actions,  suits  costs  and  expenses
            (including the Lender's  reasonable  attorneys' fees,  together with
            reasonable  appellate  counsel  fees,  if any) of  whatever  kind or
            nature which may be asserted against,  imposed on or incurred by the
            Lender in connection with the Indebtedness,  this Deed of Trust, the
            Real Property or any part  thereof,  or the  operation,  maintenance
            and/or use  thereof,  or the exercise by the Lender of any rights or
            remedies  granted  to it under  this  Deed of Trust or  pursuant  to
            applicable  law;  provided,  however,  that nothing  herein shall be
            construed  to obligate the  Borrower to  indemnify,  defend and hold
            harmless the Lender from and against any of the  foregoing  which is
            imposed  on or  incurred  by the  Lender by  reason of the  Lender's
            willful misconduct or gross negligence.

      26.7 RECORDING AND FILING

            The  Borrower  shall  cause  this Deed of Trust and all  amendments,
            supplements,  and substitutions to be recorded,  filed,  re-recorded
            and  re-filed  in such  manner and in such  places as the Lender may
            reasonably  request.  The Borrower  will pay all  recording  filing,
            re-recording and re-filing taxes, fees and other charges.

      26.8 NO WAIVER

            No  deliberate  or  unintentional  failure  by the Lender to require
            strict performance by the Borrower of any Obligation shall be deemed
            a waiver, and the Lender shall have the right at any time to require
            strict performance by the Borrower of any Obligation.

<PAGE>

      26.9 COVENANTS RUNNING WITH THE LAND

            All  Obligations  are  intended  by the  parties  to be and shall be
            construed as covenants running with the Land.

      26.10 SEVERABILITY

            The Loan Documents are intended to be performed in accordance  with,
            and  only  to  the  extent   permitted  by,  all  applicable   Legal
            Requirements. Any provision of the Loan Documents that is prohibited
            or unenforceable in any jurisdiction shall nevertheless be construed
            and  given  effect  to  the  extent  possible.   The  invalidity  or
            unenforceability of any provision in a particular jurisdiction shall
            neither  invalidate nor render  unenforceable any other provision of
            the Loan  Documents in that  jurisdiction,  and shall not affect the
            validity  or   enforceability   of  that   provision  in  any  other
            jurisdiction.  If a provision is held to be invalid or unenforceable
            as to a  particular  person or under a particular  circumstance,  it
            shall  nevertheless  be presumed valid and enforceable as to others,
            or under other circumstances.

      26.11 USURY

          The parties intend that no provision of the Note or the Loan Documents
          be  interpreted,  construed,  applied,  or enforced so as to permit or
          require the payment or collection of interest in excess of the Maximum
          Permitted  Rate.  In this  regard,  the  Borrower  and the Lender each
          stipulate and agree that it is their common and  overriding  intent to
          contract in strict compliance with applicable usury laws. Accordingly,
          none of the terms of this Deed of Trust,  the Note or any of the other
          Loan Documents shall ever be construed to create a contract to pay, as
          consideration for the use, forbearance or detention of money, interest
          at a rate in excess of the Maximum  Permitted  Rate,  and the Borrower
          shall never be liable for interest in excess of the Maximum  Permitted
          Rate.   Therefore,   (a)  in  the  event  that  the  Indebtedness  and
          Obligations  are  prepaid  or the  maturity  of the  Indebtedness  and
          Obligations  is  accelerated  by reason of an  election by the Lender,
          unearned  interest shall be canceled and, if theretofore  paid,  shall
          either be refunded to the Borrower or credited on the Indebtedness, as
          the Lender may elect;  (b) the  aggregate  of all  interest  and other
          charges  constituting  interest under  applicable  laws and contracted
          for,  chargeable  or  receivable  under  the Note and the  other  Loan
          Documents or otherwise in connection with the transaction contemplated
          thereby shall never exceed the maximum amount of interest, nor produce
          a rate in excess of the Maximum  Permitted Rate; and (c) if any excess
          interest is provided  for or  received,  it shall be deemed a mistake,
          and the same shall, at the option of the Lender, either be refunded to
          the Borrower or credited on the unpaid  principal amount (if any), and
          the Indebtedness shall be automatically  reformed so as to permit only
          the  collection  of  the  interest  at  the  Maximum  Permitted  Rate.
          Furthermore,  if any  provision  of the Note or any of the other  Loan
          Documents is interpreted,  construed,  applied, or enforced, in such a
          manner as to provide for  interest in excess of the Maximum  Permitted
          Rate, then the parties intend that such provision  automatically shall
          be deemed  reformed  retroactively  so as to require  payment  only of
          interest at the Maximum Permitted Rate. If, for any reason whatsoever,
          interest  paid or  received  during  the full  term of the  applicable
          Indebtedness produces a rate which exceeds the Maximum Permitted Rate,
          then the amount of such excess shall be deemed credited  retroactively
          in  reduction  of  the  then  outstanding   principal  amount  of  the
          Indebtedness,  together with interest at such Maximum  Permitted Rate.
          The Lender shall  credit  against the  principal of such  Indebtedness
          (or, if such  Indebtedness  shall have been paid in full, shall refund
          to the payor of such  interest) such portion of said interest as shall
          be necessary to cause the interest paid to produce a rate equal to the
          Maximum  Permitted  Rate.  All sums  paid or  agreed to be paid to the
          Lender for the use,  forbearance  or detention of money shall,  to the
          extent permitted by applicable law, be amortized,  prorated, allocated
          and spread in equal parts  throughout  the full term of the applicable
          Indebtedness, so that the interest rate is uniform throughout the full
          term of such  Indebtedness.  In connection  with all  calculations  to
          determine  the Maximum  Permitted  Rate,  the parties  intend that all
          charges be excluded to the extent they are properly  excludable  under
          applicable  usury laws,  as they from time to time are  determined  to
          apply  to this  transaction.  The  provisions  of this  Section  shall
          control all agreements,  whether now or hereafter existing and whether
          written or oral, between the Borrower and the Lender.

      26.12 ENTIRE AGREEMENT

            The Loan Documents contain the entire agreements between the parties
            relating  to the  financing  of the  Real  Property,  and all  prior
            agreements which are not contained in the Loan Documents, other than
            the  Environmental  Indemnity  Agreement,  are terminated.  The Loan
            Documents  represent the final agreement between the parties and may
            not be  contradicted  by  evidence  of  prior,  contemporaneous,  or
            subsequent  oral  agreements of the parties.  There are no unwritten
            oral  agreements  between the  parties.  The Loan  Documents  may be
            amended, revised, waived, discharged, released or terminated only by
            a written  instrument or  instruments  executed by the party against
            whom  enforcement of the  amendment,  revision,  waiver,  discharge,
            release or termination is asserted. Any alleged amendment, revision,
            waiver, discharge,  release or termination that is not so documented
            shall be null and void.

      26.13 NOTICES

            In order for any demand, consent, approval or other communication to
            be effective under the terms of this Deed of Trust, "Notice" must be
            provided under the terms of this Subsection.  All Notices must be in
            writing.  Notices may be (a) delivered by hand,  (b)  transmitted by
            facsimile  (with a duplicate copy sent by first class mail,  postage
            prepaid), (c) sent by certified or registered mail, postage prepaid,
            return receipt requested, or (d) sent by reputable overnight courier
            service, delivery charges prepaid. Notices shall be addressed as set
            forth below:

            If to the Lender:

            Transamerica Occidental Life Insurance Company
            c/o AEGON USA Realty Advisors, Inc.
            4333 Edgewood Road, N.E.
            Cedar Rapids, Iowa 52499-5443
            Attn: Mortgage Loan Department
            Reference: Loan #89540
            Fax Number: (319) 369-2277

<PAGE>

            If to the Borrower:
            Consolidated Capital Institutional
            Properties/3 4582 South Ulster St. Parkway
            Denver, Colorado 80237
            Attn: Dodge McCord
            Fax Number: (303) 759-8116

            If to the Trustee:

            Bonneville Title Company 1518 N.
            Woodland Park Drive Layton, Utah
            84041
            Fax Number: (801) 774-5595

            Notices  delivered by hand or by overnight  courier  shall be deemed
            given when  actually  received  or when  refused  by their  intended
            recipient. Notices sent by facsimile will be deemed delivered when a
            legible copy has been received  (provided  receipt has been verified
            by telephone  confirmation  or one of the other  permitted  means of
            giving  Notices  under this  Subsection).  Mailed  Notices  shall be
            deemed given on the date of the first attempted delivery (whether or
            not actually received). Either the Lender or the Borrower may change
            its  address  for Notice by giving at least  fifteen  (15)  Business
            Days' prior Notice of such change to the other party.

      26.14 COUNTERPARTS

            This Deed of Trust may be  executed  in any number of  counterparts,
            each of which shall be an original,  but all of which together shall
            constitute but one instrument.

      26.15 CHOICE OF LAW

            This Deed of Trust shall be  interpreted,  construed,  applied,  and
            enforced  according  to, and will be governed  by, the laws of Utah,
            without  regard to any choice of law principle  which,  but for this
            provision,  would  require  the  application  of the law of  another
            jurisdiction  and regardless of where  executed or delivered,  where
            payable or paid,  where any cause of action  accrues  in  connection
            with  this  transaction,   where  any  action  or  other  proceeding
            involving  the  Loan is  instituted,  or  whether  the  laws of Utah
            otherwise would apply the laws of another jurisdiction.

      26.16 FORUM SELECTION

          The  Borrower  agrees  that  the  sole  and  exclusive  forum  for the
          determination   of  any   action   relating   to  the   validity   and
          enforceability  of the Note,  this  Deed of Trust  and the other  Loan
          Documents, and any other instruments securing the Note shall be either
          in an appropriate  court of the State of Utah or the applicable United
          States District Court.

      26.17 SOLE BENEFIT

            This Deed of Trust and the other Loan  Documents  have been executed
            for  the  sole  benefit  of the  Borrower  and  the  Lender  and the
            successors  and  assigns of the  Lender.  No other  party shall have
            rights  thereunder or be entitled to assume that the parties thereto
            will insist  upon strict  performance  of their  mutual  obligations
            hereunder,  any of  which  may be  waived  from  time to  time.  The
            Borrower  shall have no right to assign any of its rights  under the
            Loan Documents to any party whatsoever.

      26.1 8 RELEASE OF CLAIMS

            The Borrower  hereby  RELEASES,  DISCHARGES and ACQUITS  forever the
            Lender and the  Trustee  and their  officers,  directors,  trustees,
            agents,  employees  and  counsel  (in each  case,  past,  present or
            future)  from any and all Claims  existing as of the date hereof (or
            the date of actual execution hereof by the Borrower,  if later).  As
            used herein,  the term "Claim"  shall mean any and all  liabilities,
            claims,  defenses,  demands,  actions, causes of action,  judgments,
            deficiencies,  interest,  liens, costs or expenses  (including court
            costs,  penalties,  attorneys' fees and  disbursements,  and amounts
            paid in settlement) of any kind and character whatsoever,  including
            claims  for  usury,  breach  of  contract,   breach  of  commitment,
            negligent misrepresentation or failure to act in good faith, in each
            case  whether  now  known  or  unknown,  suspected  or  unsuspected,
            asserted or unasserted or primary or contingent, and whether arising
            out of written documents, unwritten undertakings, course of conduct,
            tort, violations of laws or regulations or otherwise.

      26.19 NO PARTNERSHIP

            Nothing  contained  in the Loan  Documents is intended to create any
            partnership,  joint venture or association  between the Borrower and
            the Lender,  or in any way make the Lender a  co-principal  with the
            Borrower with reference to the Property.

      26.20 PAYOFF PROCEDURES

            If the  Borrower  pays or causes to be paid to the Lender all of the
            Indebtedness, then the Trustee's interest in the Real Property shall
            cease,  and upon receipt by the Lender of such  payment,  the Lender
            shall either (a) release this Deed of Trust,  or (b) assign the Loan
            Documents  and endorse the Note (in either case without  recourse or
            warranty  of any kind) to a takeout  lender,  upon  payment  (in the
            latter case) of an administrative fee of Seven Hundred Fifty Dollars
            ($750).

      26.21 SURVIVAL OF COMMITMENT TERMS

          The  Commitment  shall survive the execution of this Deed of Trust and
          the other Loan  Documents.  Any term of the  Commitment  that has been
          inadvertently  omitted from the Loan Documents is hereby  incorporated
          in this  Deed of Trust  by  reference.  If any term of the  Commitment
          conflicts  with a provision of this Deed of Trust that  addresses  the
          same  subject,  the terms of this  Deed of Trust  shall  prevail.  Any
          provision of the Commitment  which  specifically  states that it shall
          survive  the  closing  of the Loan  shall so  survive,  and is  hereby
          incorporated in this Deed of Trust by reference.

      26.22 FUTURE ADVANCES

            Under  this Deed of Trust,  "Indebtedness"  is  defined  to  include
            certain  advances  made by the Lender in the future.  Such  advances
            include any  additional  disbursements  to the  Borrower  (unless in
            connection  with another,  independent  mortgage  financing) and any
            obligations  under agreements which  specifically  provide that such
            obligations  are  secured  by  this  Deed  of  Trust.  In  addition,
            Indebtedness  is defined  to include  any  amounts  advanced  to pay
            Impositions, to cure Defaults, or to pay the costs of collection and
            receivership.  Accordingly,  all such advances and obligations shall
            be equally  secured  with,  and shall have the same priority as, the
            Indebtedness,  and  shall  be  subj  ect to all  of  the  terms  and
            provisions of this Deed of Trust.  The Borrower  shall pay any taxes
            that may be due in connection with any such future advance.

      26.23 INTERPRETATION

(a)   Headings and General Application

                  The section,  subsection,  paragraph and subparagraph headings
                  of  this  Deed  of  Trust  are  provided  for  convenience  of
                  reference  only and shall in no way affect,  modify or define,
                  or  be  used  in   construing,   the  text  of  the  sections,
                  subsections,   paragraphs  or   subparagraphs.   If  the  text
                  requires,  words  used  in  the  singular  shall  be  read  as
                  including the plural, and pronouns of any gender shall include
                  all genders.

(b)   Sole Discretion

                  The Lender may take any action or decide any matter  under the
                  terms  of this  Deed of Trust or of any  other  Loan  Document
                  (including any consent, approval, acceptance, option, election
                  or authorization) in its sole and absolute discretion, for any
                  reason or for no reason,  unless  the  related  Loan  Document
                  contains  specific  language to the contrary.  Any approval or
                  consent that the Lender might  withhold may be  conditioned in
                  any way.

(c)   Result of Negotiations

                  This  Deed of Trust  results  from  negotiations  between  the
                  Borrower  and  the  Lender  and  from  their  mutual  efforts.
                  Therefore, it shall be so construed,  and not as though it had
                  been prepared solely by the Lender.

(d)   Reference to Particulars

                  The scope of a general statement made in this Deed of Trust or
                  in any other Loan  Document  shall not be  construed as having
                  been reduced through the inclusion of references to particular
                  items that would be  included  within the  statement's  scope.
                  Therefore,  unless the relevant  provision of a Loan  Document
                  contains specific language to the contrary, the term "include"
                  shall mean "include, but shall not be limited to" and the term
                  "including" shall mean "including, without limitation."

      26.24 INDEBTEDNESS MAY EXCEED NOTE'S FACE AMOUNT

            The  Borrower's  successors  or assigns are hereby  placed on Notice
            that the Note contains late charge,  prepayment and other provisions
            which may result in the outstanding  principal balance exceeding the
            face amount of the Note.

      26.25 JOINT AND SEVERAL LIABILITY

            If there is more than one  individual or entity  executing this Deed
            of Trust as the Borrower, liability of such individuals and entities
            under this Deed of Trust shall be joint and several.

      26.26 TIME OF ESSENCE

            Time is of the  essence of each and every  covenant,  condition  and
            provision of this Deed of Trust to be performed by the Borrower.

      26.27 JURY WAIVER

            THE BORROWER AND BY ITS ACCEPTANCE HEREOF, THE LENDER,  HEREBY WAIVE
            ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR  PROCEEDING TO ENFORCE
            OR DEFEND  ANY RIGHTS (I) UNDER THIS DEED OF TRUST OR ANY OTHER LOAN
            DOCUMENT,  OR (II) ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN
            CONNECTION  WITH THIS DEED OF TRUST OR ANY OTHER LOAN DOCUMENT,  AND
            THE BORROWER AND BY ITS ACCEPTANCE  HEREOF,  THE LENDER,  AGREE THAT
            ANY SUCH ACTION OR PROCEEDING  SHALL BE TRIED BEFORE A JUDGE AND NOT
            BEFORE A JURY.

      26.28 RENEWAL, EXTENSION, MODIFICATION AND WAIVER

            The Lender, at its option, may at any time renew or extend this Deed
            of  Trust,  the Note or any  other  Loan  Document  with  Borrower's
            consent.  The  Lender  may  enter  into a  modification  of any Loan
            Document or of the  Environmental  Indemnity  Agreement  without the
            consent of any person not a party to the  document  being  modified.
            The Lender may waive any covenant or condition of any Loan  Document
            or of the Environmental Indemnity Agreement, in whole or in part, at
            the request of any person then having an interest in the Property or
            in any way liable for any part of the  Indebtedness.  The Lender may
            take,  release,  or  resort  to any  security  for the  Note and the
            Obligations  and may  release  any party  primarily  or  secondarily
            liable  on  any  Loan  Document  or on the  Environmental  Indemnity
            Agreement,   all  without  affecting  any  liability  not  expressly
            released in writing by the Lender.

      26.29 CUMULATIVE REMEDIES

          Every  right  and  remedy  provided  in this  Deed of  Trust  shall be
          cumulative  of every  other  right or  remedy of the  Lender,  whether
          conferred  by  law or by  grant  or  contract,  and  may  be  enforced
          concurrently  with any such right or  remedy.  The  acceptance  of the
          performance  of any  obligation  to  cure  any  Default  shall  not be
          construed  as a waiver of any rights  with  respect to any other past,
          present or future Default.  No waiver in a particular  instance of the
          requirement  that any Obligation be performed  shall be construed as a
          waiver with respect to any other Obligation or instance.

      26.30 NO OBLIGATION TO MARSHAL ASSETS

            No  holder  of  any  deed  of  trust,  security  interest  or  other
            encumbrance affecting all or any portion of the Real Property, which
            encumbrance  is inferior to the lien and security title of this Deed
            of Trust,  shall  have any right to  require  the  Lender to marshal
            assets.

      26.31 TRANSFER OF OWNERSHIP

            The Lender may, without notice to the Borrower, deal with any person
            in whom  ownership  of any part of the  Real  Property  has  vested,
            without  in any way  vitiating  or  discharging  the  Borrower  from
            liability for any of the Obligations.

IN  WITNESS  WHEREOF,  the  Borrower  has  caused  this Deed of Trust to be duly
executed as of the date first above written.

                                    BORROWER:

                              CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3,
                              a California limited partnership

                              By:  ConCap Equities, Inc., a Delaware corporation
                                   Its General Partner


                                    By:   /s/Patti K. Fielding
                                          Patti K. Fielding, Executive Vice
                                          President and Treasurer
<PAGE>

                                                                   Exhibit 10.60

Loan No. 89540
$4,940,000                                             August 30, 2005


                             Secured Promissory Note
FOR  VALUE  RECEIVED,   the  undersigned,   CONSOLIDATED  CAPITAL  INSTITUTIONAL
PROPERTIES/3,  a California  limited  partnership,  whose  address is 4582 South
Ulster St. Parkway,  Denver,  Colorado 80237 (the  "Borrower"),  promises to pay
Four Million Nine Hundred Forty  Thousand  Dollars  ($4,940,000),  together with
interest  according to the terms of this Secured  Promissory Note (this "Note"),
to the  order  of  TRANSAMERICA  OCCIDENTAL  LIFE  INSURANCE  COMPANY,  an  Iowa
corporation  (together with any future holder,  the "Lender"),  whose address is
c/o AEGON USA Realty  Advisors,  Inc., 4333 Edgewood Road,  N.E.,  Cedar Rapids,
Iowa 52499-5443.  Capitalized terms used but not defined in this Note shall have
the  meanings  assigned  to them in the Deed of Trust,  as defined in Section 12
below.

1.    CONTRACT INTEREST RATE
      The principal balance of this Note shall bear interest at the rate of five
      and two  onehundredths  percent  (5.02%)  per  annum  (the  "Note  Rate").
      Interest  shall be  calculated  in arrears  based on a 360-day year having
      twelve thirty-day months.  During any partial month, interest shall accrue
      based on the number of actual days which elapse during the related accrual
      period.

2.    SCHEDULED PAYMENTS

      2. 1 PREPAYMENT OF INTEREST FOR THE MONTH OF FUNDING

            Unless the funding of the loan evidenced by this Note (together with
            all additional charges, advances and accruals, the "Loan") occurs on
            the first day of a calendar month, the Borrower shall prepay, on the
            date of the  funding,  interest  due from  the  date of the  funding
            through and  including  the last day of the calendar  month in which
            the funding occurs.

      2.2    MONTHLY PRINCIPAL AND INTEREST PAYMENTS

            On the  first  day of  October,  2005,  and on the first day of each
            subsequent  calendar month through August,  2015, the Borrower shall
            pay an installment in the amount of Twenty-Six Thousand Five Hundred
            Seventy-Nine and 40/100 Dollars  ($26,579.40).  Monthly installments
            of principal and interest shall be made when due,  regardless of the
            prior acceptance by the Lender of unscheduled payments.


      2.3    FINAL PAYMENT

            The Loan  shall  mature  on the first  day of  September,  2015 (the
            "Maturity  Date"),  when the Borrower shall pay its entire principal
            balance,  together  with all accrued  interest and any other amounts
            owed by the  Borrower  under  this  Note or under  any of the  other
            documents  entered into now or in the future in connection  with the
            Loan (the "Loan Documents").

3. BALLOON PAYMENT ACKNOWLEDGMENT

      The Borrower  acknowledges that the scheduled monthly payments referred to
      in Section 2 will not amortize  fully the  principal sum of this Note over
      its term,  resulting  in a  "balloon"  payment  at  maturity.  Any  future
      agreement to extend this Note or refinance the  indebtedness  it evidences
      may be made  only by  means of a  writing  executed  by a duly  authorized
      officer of the Lender.

4.    APPLICATION OF MONTHLY PRINCIPAL AND INTEREST PAYMENTS

     When the Lender  receives a monthly  principal  and interest  payment,  the
     Lender shall apply it first to interest in arrears for the  previous  month
     and then to the amortization of the principal  amount of this Note,  unless
     other amounts are then due under this Note or the other Loan Documents.  If
     other  amounts  are due when a regular  monthly  payment is  received,  the
     Lender shall apply the payment  first to accrued  interest and then, at its
     discretion, either to those other amounts or to principal.

5.    DEFAULT INTEREST

      If a Default  exists  (as  defined  in  Section 9 below)  the  outstanding
      principal  balance of this Note shall,  at the option of the Lender,  bear
      interest  at a rate  (the  "Default  Rate")  equal  to the  lesser  of (i)
      eighteen  percent  (18%) per annum,  and (ii) the maximum  rate allowed by
      law. If interest  has accrued at the Default  Rate during any period,  the
      difference  between  such accrued  interest and interest  which would have
      accrued at the Note Rate during such period shall be payable on demand. If
      a court of competent jurisdiction determines that any interest charged has
      exceeded  the  maximum  rate  allowed  by law,  the  excess of the  amount
      collected  over  the  legal  rate  of  interest  will  be  applied  to the
      indebtedness as a principal prepayment without premium,  retroactively, as
      of the date of receipt,  or returned to the Borrower if the  Indebtedness,
      as such term is defined in the Deed of Trust, has been fully paid.

6. LATE CHARGE

      If the  Lender  does not  receive  any  scheduled  monthly  principal  and
      interest  payment on or before the tenth (10th) day of the calendar  month
      in which it is due, the Lender will send the Borrower  written notice that
      a late charge  equal to five percent (5%) of the late payment has accrued.
      The Borrower  shall pay any such late charge on or before the tenth (10th)
      day of the  calendar  month  following  the  month  during  which the late
      payment  was  scheduled  to have been  received.  Interest  on unpaid late
      charges  shall,  at the  Lender's  discretion,  accrue  at the  Note  Rate
      beginning on the first day of the calendar month following their accrual.

7.     PREPAYMENT

     This Note may be  prepaid,  in whole  only,  upon not less than  sixty (60)
     days' prior written  notice to the Lender.  At the time of any  prepayment,
     the Borrower  shall pay all accrued  interest on the  principal  balance of
     this Note and all other sums due to the Lender under the Loan Documents. In
     addition, unless the prepayment is a "Permitted Par Prepayment" (as defined
     in Section 8 below),  the Borrower shall remit together with any prepayment
     a premium (the "Prepayment Premium Amount") equal to the greater of (A) one
     percent (1%) of the  prepayment,  or (B) the amount (the "Yield  Protection
     Amount")  calculated in accordance  with the next  succeeding  paragraph of
     this Note. The Yield Protection Amount shall be calculated as follows:

      First,  the Lender shall  determine  the annual  percentage  yield on U.S.
      Treasury  securities  maturing  at the end of the  term of the  Loan  (the
      "Annual Treasury Instrument Yield").  The Annual Treasury Instrument Yield
      shall be  determined  as of ten (10) Business Days (as defined in the Deed
      of Trust) before the effective  date of the  prepayment.  The Lender shall
      base its  determination  of the Annual  Treasury  Instrument  Yield on the
      yield on U.S.  Treasury  instruments,  as  published  in The  Wall  Street
      Journal (or, if The Wall Street Journal is not then being  published or if
      no such reports are then being  published in The Wall Street  Journal,  as
      reported in another public source of information nationally recognized for
      accuracy in the reporting of the trading of governmental  securities).  If
      no such  instruments  mature on the exact  maturity date of this Note, the
      Lender  shall  interpolate  the  Annual  Treasury  Instrument  Yield  on a
      straight-line  basis using the yield on the instrument whose maturity date
      most closely  precedes that of this Note,  and the yield on the instrument
      whose maturity date most closely succeeds that of this Note.  Second,  the
      Lender shall  determine  the monthly  payment (the  "Monthly  Reinvestment
      Payment"),  based on a 360-day  year and  30-day  months,  which  would be
      payable on a hypothetical interest-only promissory note having a principal
      balance equal to the prepaid amount and bearing  interest at the rate (the
      "Reinvestment Rate") which, when compounded monthly, would produce a yield
      equal to the Annual Treasury Instrument Yield plus 50 basis points.

      Third, the Lender shall determine the hypothetical  monthly  interest-only
      payment (based on a 360-day year and 30-day months) which would be payable
      on a  promissory  note  having a  principal  balance  equal to the prepaid
      amount and bearing  interest at this Note Rate (the  "Monthly  Coupon Rate
      Payment").

      Fourth,  the  Lender  shall  determine  the  present  value of a series of
      monthly payments,  each equal in amount to the amount by which the Monthly
      Coupon Rate Payment exceeds the Monthly Reinvestment Payment,  received on
      the first day of each  calendar  month from and including the first day of
      the first full calendar month immediately  following the effective date of
      prepayment to and including the Maturity Date, using the Reinvestment Rate
      as the discount rate.

      Voluntary partial prepayments shall be prohibited.

      The Prepayment Premium Amount constitutes liquidated damages to compensate
      the Lender for reinvestment costs, lost opportunity costs, and the loss by
      the  Lender of its  bargained-for  investment  in the Loan.  The  Borrower
      agrees that such liquidated damages are not a penalty but are a reasonable
      estimate in good faith of the actual damages  sustained by the Lender as a
      result  of  such  prepayment,  which  actual  damages  are  impossible  to
      ascertain with precision.


8. PERMITTED PAR PREPAYMENTS

      The Lender  shall not charge a prepayment  premium on certain  prepayments
      (the "Permitted Par Prepayments"). Permitted Par Prepayments include:

          (a)  any  prepayment in full of the Loan made no more than ninety (90)
               days before the Maturity Date; and

          (b)  any  prepayment  made as the result of the  Lender's  election to
               apply insurance or condemnation proceeds to the principal balance
               of this Note.

9.    DEFAULT

      A default on this Note ("Default")  shall exist if (a) the Lender fails to
      receive any required  installment  of principal  and interest on or before
      the tenth  (10th) day of the  calendar  month in which it is due,  (b) the
      Borrower  fails to pay the  matured  balance of this Note on the  Maturity
      Date, or (c) a "Default" exists as defined in any other Loan Document.  If
      a Default exists and the Lender engages  counsel to collect any amount due
      under this Note or if the Lender is  required  to protect or enforce  this
      Note in any probate,  bankruptcy  or other  proceeding,  then any expenses
      incurred  by the  Lender  in  respect  of the  engagement,  including  the
      reasonable  fees and  reimbursable  expenses of counsel and including such
      costs and fees which  relate to issues  that are  particular  to any given
      proceeding, shall constitute indebtedness evidenced by this Note, shall be
      payable on demand,  and shall bear interest at the Default Rate. Such fees
      and expenses  include those incurred in connection with any action against
      the Borrower for a deficiency  judgment after a trustee's sale of the Real
      Property  under the Deed of Trust  (defined  below),  including all of the
      Lender's reasonable  attorneys' fees, property appraisal costs and witness
      fees. Such fees and costs,  if incurred after a trustee's sale,  shall not
      be secured by the Deed of Trust.

10.   ACCELERATION

      If a Default  exists,  the Lender may,  at its option,  declare the unpaid
      principal balance of this Note to be immediately due and payable, together
      with all accrued  interest on the  indebtedness,  all costs of  collection
      (including  reasonable attorneys' fees and expenses) and all other charges
      due  and  payable  by the  Borrower  under  this  Note or any  other  Loan
      Document. If the subject Default has arisen from a failure by the Borrower
      to make a regular  monthly  payment of principal and interest,  the Lender
      shall not accelerate the  indebtedness  unless the Lender shall have given
      the Borrower at least three (3) Business Days advance notice of its intent
      to do so.

      If the subject  Default is a "Curable  Nonmonetary  Default" as defined in
      the Deed of Trust, the Lender shall exercise its option to accelerate only
      by delivering notice of acceleration to the Borrower. The Lender shall not
      deliver  any such  notice  of  acceleration  until  (a) the  Borrower  has
      received  any  required  notice of the  prospective  Default,  and (b) any
      applicable cure period has expired.

      Except as expressly  described in this Section,  no notice of acceleration
      shall be  required  in order for the  Lender  to  exercise  its  option to
      accelerate the indebtedness in the event of Default.

11.   PREPAYMENT FOLLOWING ACCELERATION

      Any Default resulting in the acceleration of the indebtedness evidenced by
      this Note shall be  presumed to be an attempt to avoid the  provisions  of
      Section  7 of this  Note,  which  prohibit  prepayment  or  condition  the
      Lender's  obligation  to accept  prepayment on the payment of a prepayment
      premium.  Accordingly,  if the  indebtedness is  accelerated,  any amounts
      tendered to repay the accelerated indebtedness,  or realized by the Lender
      through  its  remedies  following  acceleration,  shall be  subject to the
      prepayment  premium  that  would  have  been  applicable  under  Section 7
      (calculated from the date of acceleration through the Maturity Date).

12.   SECURITY

      This Note is secured by a Deed of Trust,  Security  Agreement  and Fixture
      Filing (the "Deed of Trust")  granted by the Borrower to Bonneville  Title
      Company,  the Trustee,  for the benefit of the Lender,  conveying  certain
      real property (the "Real  Property")  located in Salt Lake City, Salt Lake
      County,  Utah,  and granting a security  interest in certain  fixtures and
      personal property,  and by an Absolute Assignment of Leases and Rents made
      by the Borrower to the Lender,  assigning the  landlord's  interest in all
      present and future leases (the "Leases") of all or any portion of the Real
      Property  encumbered  by the Deed of Trust.  Reference is made to the Loan
      Documents for a description of the security and rights of the Lender. This
      reference  shall not affect the absolute and  unconditional  obligation of
      the Borrower to repay the Loan in accordance with its terms.

13.   RECOURSE TO BORROWER

      The Lender agrees that it shall not seek to enforce any monetary  judgment
      with  respect  to the  indebtedness  evidenced  by this Note  against  the
      Borrower  except through  recourse to the Property (as defined in the Deed
      of Trust),  unless the obligation from which the judgment arises is one of
      the "Carveout Obligations" defined in Section 14.

14.   CARVEOUT OBLIGATIONS

      The "Carveout  Obligations" are (a) the obligation to repay any portion of
      the  indebtedness  evidenced  by this  Note  that  arises  from any of the
      "Carveouts"  (as defined  below),  (b) the  obligation to repay the entire
      indebtedness  evidenced by this Note, if the Lender's  exculpation  of the
      Borrower from personal liability under this Section has become void as set
      forth below,  (c) the obligation to indemnify the Lender in respect of its
      actual damages  suffered in connection with any of the Carveouts,  and (d)
      the obligation to defend and hold the Lender harmless from and against any
      claims, judgments, causes of action or proceedings arising from any of the
      Carveouts. The "Carveouts" are:

             (i) fraud or material written misrepresentation;

            (ii)  waste of the Property (which shall include damage, destruction
                  or disrepair of the Real  Property  caused by a willful act or
                  grossly negligent omission of the Borrower,  but shall exclude
                  ordinary wear and tear in the absence of gross negligence);

(iii)             misappropriation   of  tenant  security  deposits   (including
                  proceeds of tenant letters of credit),  Insurance  Proceeds or
                  Condemnation Proceeds;

(iv)              failure to pay property  taxes,  assessments or other lienable
                  Impositions;

(v)            failure  to pay to the  Lender  all  Rents,  income  and  profits
               (including any rent collected more than one (1) month in advance,
               or any rent for the last month of the lease term, under any Lease
               in force at the time of Default), net of reasonable and customary
               operating expenses, received in respect of a period when the Loan
               is in Default ;

(vi)              removal  from  the  Real  Property  of  Fixtures  or  Personal
                  Property, unless replaced in a commercially reasonable manner;

(vii)             the  out-of-pocket  expenses of enforcing  the Loan  Documents
                  following  Default,  not including expenses incurred after the
                  Borrower has agreed in writing to transfer  the Real  Property
                  to the Lender by the Lender's  choice of either an uncontested
                  foreclosure or delivery of a deed in lieu of foreclosure;
(viii)            terminating  or  amending  a Lease  in  violation  of the Loan
                  Documents; and

(ix)              any  liability  of  the  Borrower   under  the   Environmental
                  Indemnity Agreement (as defined in the Deed of Trust).

      The Lender's  exculpation of the Borrower from personal  liability for the
      repayment of the Indebtedness evidenced by this Note shall be void without
      Notice if the Borrower (A) voluntarily  transfers or creates any voluntary
      lien on the Property in violation  of the Loan  Documents,  or (B) files a
      voluntary petition for reorganization  under Title 11 of the United States
      Code (or under any other  present  or future  law,  domestic  or  foreign,
      relating  to  bankruptcy,   insolvency,   reorganization   proceedings  or
      otherwise  similarly  affecting  the  rights  of  creditors),  and has not
      offered,  prior to the filing, to enter into the Lender's choice of either
      an  agreement  to permit an  uncontested  foreclosure,  or an agreement to
      deliver  a deed in lieu  of  foreclosure  within  sixty  (60)  days of the
      Lender's  acceptance of the offer. After the Lender accepts such an offer,
      default by the  Borrower in  fulfilling  the terms of the  accepted  offer
      shall  trigger  personal  liability for the entire  Indebtedness.  No such
      offer shall be conditioned on any payment by the Lender, on the release of
      any Obligor from any Obligation, or on any other concession.

15.   SEVERABILITY

      If  any  provision  of  this  Note  is  held  to be  invalid,  illegal  or
      unenforceable in any respect, or operates, or would if enforced operate to
      invalidate  this Note,  then that provision shall be deemed null and void.
      Nevertheless,  its nullity  shall not affect the  remaining  provisions of
      this Note, which shall in no way be affected, prejudiced or disturbed.

16.   WAIVER

      Except to the extent that such rights are expressly provided in this Note,
      the Borrower waives demand,  presentment for payment,  notice of intent to
      accelerate,  notice of acceleration,  protest, notice of protest, dishonor
      and of  nonpayment  and  any  and  all  lack of  diligence  or  delays  in
      collection or enforcement of this Note. Without affecting the liability of
      the Borrower  under this Note, the Lender may release any of the Property,
      grant any  indulgence,  forbearance  or extension of time for payment,  or
      release  any other  person now or in the future  liable for the payment or
      performance  of any  obligation  under  this  Note  or  any  of  the  Loan
      Documents.

      The Borrower  further (a) waives any homestead or similar  exemption;  (b)
      waives any statute of limitation;  (c) agrees that the Lender may, without
      impairing any future right to insist on strict and timely  compliance with
      the terms of this  Note,  grant any number of  extensions  of time for the
      scheduled   payments  of  any  amounts   due,   and  may  make  any  other
      accommodation with respect to the indebtedness evidenced by this Note; (d)
      waives any right to require a marshaling of assets;  and (e) to the extent
      not prohibited by applicable law, waives the benefit of any law or rule of
      law intended for its  advantage or protection as a debtor or providing for
      its release or discharge  from liability  under this Note,  excepting only
      the  defense of full and  complete  payment of all  amounts due under this
      Note and the Loan Documents.

17.   VARIATION IN PRONOUNS

      All the terms and words  used in this Note,  regardless  of the number and
      gender in which they are used,  shall be deemed and  construed  to include
      any other number,  singular or plural,  and any other  gender,  masculine,
      feminine, or neuter, as the context or sense of this Note or any paragraph
      or clause herein may require,  the same as if such word had been fully and
      properly written in the correct number and gender.

18.   WAIVER OF JURY TRIAL

      THE BORROWER  HEREBY  WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
      PROCEEDING  TO  ENFORCE  OR DEFEND  ANY  RIGHTS (A) UNDER THIS NOTE OR ANY
      OTHER LOAN DOCUMENT, OR (B) ARISING FROM ANY LENDING RELATIONSHIP EXISTING
      IN CONNECTION WITH THIS NOTE OR ANY OTHER LOAN DOCUMENT,  AND THE BORROWER
      AGREES THAT ANY SUCH ACTION OR  PROCEEDING  SHALL BE TRIED  BEFORE A JUDGE
      AND NOT BEFORE A JURY.

19.   OFFSET RIGHTS

      In  addition  to all liens  upon and rights of setoff  against  the money,
      securities,  or other property of the Borrower given to the Lender by law,
      the Lender shall have a lien upon and a right of setoff against all money,
      securities,  and other  property  of the  Borrower,  now or  hereafter  in
      possession of or on deposit with the Lender,  whether held in a general or
      special account or deposit, or safe-keeping or otherwise, and, following a
      Default,  every  such lien and right of setoff  may be  exercised  without
      demand upon, or notice to the  Borrower.  No lien or right of setoff shall
      be  deemed to have been  waived by any act or  conduct  on the part of the
      Lender,  or by any neglect to exercise  such right of setoff or to enforce
      such lien, or by any delay in so doing, and every right of setoff and lien
      shall continue in full force and effect until such right of setoff or lien
      is specifically waived or released by an instrument in writing executed by
      the Lender.

20.   COMMERCIAL LOAN

      The Borrower  hereby  represents  and warrants to the Lender that the Loan
      was made for commercial or business purposes, and that the funds evidenced
      by this Note will be used solely in connection with such purposes.
<PAGE>
21. REPLACEMENT OR BIFURCATION OF NOTE
      If this Note is lost or  destroyed,  the Borrower  shall,  at the Lender's
      request,  execute and return to the Lender a replacement  promissory  note
      identical to this Note,  provided  the Lender  delivers to the Borrower an
      affidavit  to  the  foregoing  effect.   Upon  delivery  of  the  executed
      replacement Note, the Lender shall indemnify the Borrower from and against
      its actual  damages  suffered  as a result of the  existence  of two Notes
      evidencing  the same  obligation.  No  replacement of this Note under this
      Section  shall result in a novation of the  Borrower's  obligations  under
      this Note. In addition, the Lender may at its sole and absolute discretion
      require, at no cost to Borrower, that the Borrower execute and deliver two
      separate  promissory  notes,  which shall replace this Note as evidence of
      the  Borrower's  obligations.  The  two  replacement  notes  shall,  taken
      together,  evidence  the exact  obligations  set forth in this  Note.  The
      replacement notes shall be independently transferable.  If this Note is so
      replaced,  the Lender  shall  return this Note to the  Borrower  marked to
      evidence its cancellation.


22.   GOVERNING LAW

      This Note shall be construed  and enforced  according to, and governed by,
      the laws of Utah without  reference to conflicts of laws provisions which,
      but for this  provision,  would require the  application of the law of any
      other jurisdiction.


23.   TIME OF ESSENCE

      In the performance of the Borrower's  obligations under this Note, time is
      of the essence.


24.   NO ORAL AGREEMENTS
      THIS  NOTE AND ALL THE OTHER  LOAN  DOCUMENTS  EMBODY  THE  FINAL,  ENTIRE
      AGREEMENT OF THE BORROWER AND THE LENDER AND  SUPERSEDE  ANY AND ALL PRIOR
      COMMITMENTS,  AGREEMENTS,   REPRESENTATIONS  AND  UNDERSTANDINGS,  WHETHER
      WRITTEN  OR ORAL,  RELATING  TO THE LOAN  AND MAY NOT BE  CONTRADICTED  OR
      VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
      OR  DISCUSSIONS  OF THE  BORROWER  AND  THE  LENDER.  THERE  ARE  NO  ORAL
      AGREEMENTS  BETWEEN THE BORROWER AND THE LENDER.  THE  PROVISIONS  OF THIS
      NOTE AND THE OTHER LOAN  DOCUMENTS  MAY BE  AMENDED OR REVISED  ONLY BY AN
      INSTRUMENT IN WRITING SIGNED BY THE BORROWER AND THE LENDER.


<PAGE>


IN WITNESS WHEREOF,  the Borrower has caused this Note to be duly executed as of
the date first above written.

                                    BORROWER:

                              CONSOLIDATED CAPITAL INSTITUTIONAL
                              PROPERTIES/3, a California limited
                                   partnership

                              By:   ConCap Equities, Inc., a Delaware
                                    corporation Its General Partner


                            By:     /s/Patti K. Fielding
                                    Patti K. Fielding,
                                    Executive Vice President
                                    and Treasurer