FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
                     THE SECURITIES EXCHANGE ACT OF 1934



                   U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   Form 10-QSB

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

              For the quarterly period ended September 30, 2001


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


             For the transition period from _________to _________

                         Commission file number 0-14187


               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 (1) 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___



<PAGE>



                         PART I - FINANCIAL INFORMATION


ITEM 1.     FINANCIAL STATEMENTS

a)

               CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3

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

                               September 30, 2001

<TABLE>
<CAPTION>

Assets
<S>                                                                       <C>
   Cash and cash equivalents                                              $ 2,583
   Receivables and deposits                                                   760
   Restricted escrows                                                         352
   Other assets                                                             1,502
   Investment properties:
      Land                                               $  8,641
      Buildings and related personal property              47,975
                                                           56,616
      Less accumulated depreciation                       (22,246)         34,370
                                                                         $ 39,567
Liabilities and Partners' Deficit
Liabilities
   Accounts payable                                                        $ 218
   Tenant security deposit liabilities                                        337
   Accrued property taxes                                                     439
   Other liabilities                                                          697
   Mortgage notes payable                                                  47,570

Partners' Deficit
   General partner                                        $ (937)
   Limited partners (383,033 units outstanding)            (8,757)         (9,694)
                                                                         $ 39,567

                See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>

b)

               CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3

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

<TABLE>
<CAPTION>

                                            For the Three Months      For the Nine Months
                                            Ended September 30,       Ended September 30,
                                             2001         2000         2001        2000
Revenues:
<S>                                         <C>          <C>         <C>          <C>
  Rental income                             $ 3,182      $ 3,221     $ 9,635      $ 9,536
  Other income                                  290          343         946          892
      Total revenues                          3,472        3,564      10,581       10,428

Expenses:
  Operating                                   1,191        1,133       3,590        3,377
  General and administrative                    157          238         522          557
  Depreciation                                  709          715       2,175        2,154
  Interest                                      889          533       1,964        1,580
  Property taxes                                177          201         576          566
      Total expenses                          3,123        2,820       8,827        8,234

Income before extraordinary item                349          744       1,754        2,194
Extraordinary loss on early
  extinguishment of debt                        (56)          --        (156)          --

Net income                                   $ 293        $ 744      $ 1,598      $ 2,194

Net income allocated to general
  partner (1%)                                $ 3          $ 7         $ 16        $ 22
Net income allocated to limited
  partners (99%)                                290          737       1,582        2,172

                                             $ 293        $ 744      $ 1,598      $ 2,194
Per limited partnership unit:
  Income before extraordinary item          $ 0.90       $ 1.92       $ 4.53      $ 5.67
  Extraordinary loss on early
   extinguishment of debt                     (0.14)          --       (0.40)          --

Net income                                  $ 0.76       $ 1.92       $ 4.13      $ 5.67

Distributions per limited
  partnership unit                          $ 45.64      $ 1.38      $ 53.09      $ 11.26

                See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>

c)

               CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3

             STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
                                   (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) capital
   at December 31, 2000               383,033       $ (748)     $ 9,998      $ 9,250

Distributions to partners                  --          (205)     (20,337)    (20,542)

Net income for the nine months
   ended September 30, 2001                --            16        1,582       1,598

Partners' deficit at
   September 30, 2001                 383,033       $ (937)     $ (8,757)   $ (9,694)

                See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>
d)
               CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3

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

                                                                   Nine Months Ended
                                                                     September 30,
                                                                   2001        2000
Cash flows from operating activities:
<S>                                                               <C>         <C>
  Net income                                                      $ 1,598     $ 2,194
  Adjustments to reconcile net income to net cash
   provided by operating activities:
      Depreciation                                                  2,175       2,154
      Amortization of loan costs                                       85          76
      Extraordinary loss on early extinguishment of debt              156          --
      Casualty loss                                                     9          --
      Change in accounts:
        Receivables and deposits                                     (128)       (549)
        Other assets                                                 (103)        (54)
        Accounts payable                                              (88)       (179)
        Due to affiliate                                               --        (125)
        Tenant security deposit liabilities                            (8)         44
        Accrued property taxes                                        287         256
        Other liabilities                                             (47)        (44)
         Net cash provided by operating activities                  3,936       3,773

Cash flows from investing activities:
  Property improvements and replacements                           (1,436)     (1,271)
  Net receipts from restricted escrows                                 94         570
  Insurance proceeds received                                          13          --
         Net cash used in investing activities                     (1,329)       (701)

Cash flows from financing activities:
  Repayment of mortgage notes payable                             (17,100)         --
  Proceeds from mortgage notes payable                             36,860          --
  Loan costs paid                                                  (1,137)         --
  Payments on mortgage notes payable                                 (115)         --
  Distributions to partners                                       (20,542)     (4,358)
         Net cash used in financing activities                     (2,034)     (4,358)

Net increase (decrease) in cash and cash equivalents                  573      (1,286)

Cash and cash equivalents at beginning of period                    2,010       5,451

Cash and cash equivalents at end of period                        $ 2,583     $ 4,165

Supplemental disclosure of cash flow information:
  Cash paid for interest                                          $ 1,767     $ 1,504

                See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>

e)
                 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"),  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, 2001,  are not  necessarily
indicative  of the  results  that may be  expected  for the fiscal  year  ending
December 31, 2001. 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, 2000. The General Partner is an affiliate
of Apartment Investment and Management Company ("AIMCO"), a publicly traded real
estate investment trust.

Segment Reporting

Statement of Financial  Accounting Standards ("SFAS") No. 131, "Disclosure about
Segments of an Enterprise and Related Information" established standards for the
way that public business enterprises report information about operating segments
in annual  financial  statements  and  requires  that those  enterprises  report
selected  information about operating segments in interim financial reports.  It
also established  standards for related disclosures about products and services,
geographic  areas,  and  major  customers.  As  defined  in SFAS  No.  131,  the
Partnership has only one reportable  segment.  The General Partner believes that
segment-based disclosures will not result in a more meaningful presentation than
the financial statements as currently presented.

Note B - Related Party Transactions

The  Partnership has no employees and is dependent on the General Partner and/or
its  affiliates  for  the  management  and  administration  of  all  Partnership
activities. The limited partnership agreement ("Partnership Agreement") provides
for  payments  to  affiliates  for  property  management  services  based  on  a
percentage of revenue. The Partnership Agreement also provides for reimbursement
to the General  Partner and its affiliates for costs incurred in connection with
the administration of Partnership activities.

The  following  amounts  were paid or accrued  to the  General  Partner  and its
affiliates  during each of the nine month periods  ended  September 30, 2001 and
2000:

                                                                  2001      2000
                                                                  (in thousands)

 Property management fees (included in operating expenses)        $537      $511
 Reimbursements for services of affiliates (included in
   investment properties, general and administrative
   expenses, and operating expenses)                               780       368
 Loan costs (included in other assets)                             369        --

During the nine months  ended  September  30, 2001 and 2000,  affiliates  of the
General  Partner  were  entitled  to receive 5% of gross  receipts  from all the
Partnership's  residential  properties as  compensation  for providing  property
management  services.  The  Partnership  paid to such  affiliates  approximately
$537,000 and $511,000 for  management  fees for the nine months ended  September
30, 2001 and 2000, respectively.

An  affiliate  of the General  Partner  received  reimbursement  of  accountable
administrative expenses amounting to approximately $780,000 and $368,000 for the
nine month periods ended September 30, 2001 and 2000, respectively.  Included in
the charges  for the nine  months  ended  September  30,  2001 is  approximately
$412,000 of construction service reimbursements.

In addition to  reimbursement  for services of  affiliates,  an affiliate of the
General  Partner  earned  approximately  $369,000  for  services  related to the
refinancings of Lamplighter Park Apartments,  Tamarac Village Apartments,  Cedar
Rim  Apartments,  and  Hidden  Cove  Apartments  during  the nine  months  ended
September  30,  2001.  These costs were  capitalized  and are  included in other
assets on the balance sheet.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership,   AIMCO  and  its  affiliates   currently  own  196,772.90  limited
partnership  units in the  Partnership  representing  51.37% of the  outstanding
units at September 30, 2001. 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 make one or more additional offers to acquire additional limited
partnership  interests in the  Partnership  for cash or in exchange for units in
the operating partnership of AIMCO. Under the Partnership Agreement, unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters  which  would  include  voting on certain  amendments  to the
Partnership  Agreement and voting to remove the General Partner.  As a result of
its  ownership  of 51.37% of the  outstanding  units,  AIMCO is in a position to
control all such voting decisions with respect to the Registrant. When voting on
matters,  AIMCO would in all  likelihood  vote the Units it acquired in a manner
favorable to the interest of the General Partner because of its affiliation with
the General Partner.

Note C - Distributions

During the nine months ended  September  30,  2001,  the  Partnership  paid cash
distributions of  approximately  $20,542,000  (approximately  $20,337,000 to the
limited partners or $53.09 per limited  partnership unit) of which approximately
$2,884,000  (approximately  $2,855,000  to the  limited  partners  or $7.45  per
limited  partnership  unit) was from  operations and  approximately  $17,658,000
(approximately  $17,482,000  to the  limited  partners  or  $45.64  per  limited
partnership unit) was from refinancing  proceeds of Tamarac Village  Apartments,
Lamplighter  Park  Apartments,  and Cedar Rim Apartments.  The Partnership  paid
distributions  of cash generated  from  operations of  approximately  $4,358,000
(approximately  $4,314,000  to  the  limited  partners  or  $11.26  per  limited
partnership unit) during the nine months ended September 30, 2000. Subsequent to
September 30, 2001,  the General  Partner  declared and paid a  distribution  of
approximately  $1,834,000  (approximately  $1,816,000 to the limited partners or
$4.74  per  limited   partnership  unit)  of  which   approximately   $1,107,000
(approximately   $1,096,000  to  the  limited  partners  or  $2.86  per  limited
partnership unit) was from operations and approximately $727,000  (approximately
$720,000 to the limited partners or $1.88 per limited partnership unit) was from
refinancing proceeds of Hidden Cove and Cedar Rim Apartments.

Note D - Refinancings of Mortgage Notes Payable

On June 27, 2001, the Partnership  refinanced the mortgage  encumbering  Tamarac
Village. The refinancing replaced indebtedness of approximately  $9,400,000 with
a new mortgage of $21,000,000.  The new mortgage  carries a stated interest rate
of 7.45% as compared to the 7.33% interest rate on the old mortgage. Payments on
the  mortgage  loan are due  monthly  until the loan  matures on July 1, 2021 at
which time the loan will be fully  amortized.  In addition,  the Partnership was
required to establish a repair escrow of approximately  $136,000 with the lender
for  certain   capital   replacements.   Total   capitalized   loan  costs  were
approximately  $604,000 at September  30, 2001.  The  Partnership  recognized an
extraordinary loss on the early extinguishment of debt of approximately  $66,000
due to the write-off of unamortized loan costs.

On  June  29,  2001,  the  Partnership   refinanced  the  mortgage   encumbering
Lamplighter  Park.  The  refinancing  replaced   indebtedness  of  approximately
$3,500,000 with a new mortgage of $8,000,000.  The new mortgage carries a stated
interest  rate of  7.48%  as  compared  to the  7.33%  interest  rate on the old
mortgage.  Payments on the mortgage  loan are due monthly until the loan matures
on July 1, 2021 at which time the loan will be fully amortized. In addition, the
Partnership  was required to establish a repair escrow of  approximately  $2,000
with the lender for certain capital  replacements.  Total capitalized loan costs
were approximately $247,000 at September 30, 2001. The Partnership recognized an
extraordinary loss on the early extinguishment of debt of approximately  $34,000
due to the write-off of unamortized loan costs.

On July 23, 2001, the Partnership  refinanced the mortgage encumbering Cedar Rim
Apartments.  The refinancing replaced  indebtedness of approximately  $2,000,000
with a new mortgage of $5,000,000.  The new mortgage  carries a stated  interest
rate of  7.49% as  compared  to the  7.33%  interest  rate on the old  mortgage.
Payments on the mortgage  loan are due monthly  until the loan matures on August
1, 2021 at which time the loan will be fully amortized.  Total  capitalized loan
costs were  approximately  $166,000  at  September  30,  2001.  The  Partnership
recognized  an  extraordinary  loss  on the  early  extinguishment  of  debt  of
approximately $28,000 due to the write-off of unamortized loan costs.

On September  19, 2001,  the  Partnership  refinanced  the mortgage  encumbering
Hidden Cove Apartments.  The refinancing replaced  indebtedness of approximately
$2,200,000 with a new mortgage of $2,860,000.  The new mortgage carries a stated
interest  rate of  6.81%  as  compared  to the  7.33%  interest  rate on the old
mortgage.  Payments on the mortgage  loan are due monthly until the loan matures
on October 1, 2021 at which time the loan will be fully amortized.  In addition,
the  Partnership  was  required to  establish a repair  escrow of  approximately
$152,000 with the lender for certain  capital  replacements.  Total  capitalized
loan costs were  approximately  $120,000 at September 30, 2001. The  Partnership
recognized  an  extraordinary  loss  on the  early  extinguishment  of  debt  of
approximately $28,000 due to the write-off of unamortized loan costs.

Note E - 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 purports to
assert  claims on behalf of a class of  limited  partners  and  derivatively  on
behalf of a number of limited partnerships (including the Partnership) which are
named as nominal defendants, challenging, among other things, the acquisition of
interests in certain general partner entities by Insignia  Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia;  past
tender offers by the Insignia  affiliates to acquire limited  partnership units;
management of the  partnerships  by the Insignia  affiliates;  and the series of
transactions  which  closed on October 1, 1998 and  February  26,  1999  whereby
Insignia and Insignia  Properties Trust,  respectively,  were merged into AIMCO.
The plaintiffs seek monetary damages and equitable  relief,  including  judicial
dissolution of the  Partnership.  On June 25, 1998, the General  Partner filed a
motion seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs  filed an amended  complaint.  The General Partner filed demurrers to
the amended complaint which were heard February 1999.

Pending the ruling on such  demurrers,  settlement  negotiations  commenced.  On
November 2, 1999,  the parties  executed and filed a Stipulation  of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  at which time
the Court set a final  approval  hearing for  December  10,  1999.  Prior to the
December  10,  1999  hearing,  the  Court  received  various  objections  to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement.  On
December  14,  1999,  the General  Partner  and its  affiliates  terminated  the
proposed settlement.  In February 2000, counsel for some of the named plaintiffs
filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated
the settlement.  On June 27, 2000, the Court entered an order disqualifying them
from the case and an appeal was taken  from the order on  October  5,  2000.  On
December 4, 2000, the Court  appointed the law firm of Lieff Cabraser  Heimann &
Bernstein  LLP as new  lead  counsel  for  plaintiffs  and the  putative  class.
Plaintiffs  filed a third  amended  complaint on January 19,  2001.  On March 2,
2001,  the  General  Partner  and its  affiliates  filed a demurrer to the third
amended  complaint.  On May 14, 2001,  the Court heard the demurrer to the third
amended  complaint.  On July 10,  2001,  the Court  issued  an order  sustaining
defendants'  demurrer on certain grounds.  On July 20, 2001,  plaintiffs filed a
motion for  reconsideration  of the Court's July 10, 2001 order granting in part
and denying in part defendants' demurrer. On September 7, 2001, plaintiffs filed
a fourth amended class and derivative action  complaint.  On September 12, 2001,
the Court denied plaintiffs' motion for reconsideration. On October 5, 2001, the
General Partner and affiliated defendants filed a demurrer to the fourth amended
complaint,  which,  together  with a  demurrer  filed  by other  defendants,  is
currently  scheduled  to be heard on November  15,  2001.  The Court has set the
matter for trial in January 2003.

During the third  quarter of 2001, a complaint  (the "Heller  action") was filed
against  the same  defendants  that are named in the  Nuanes  action,  captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended  complaint.  The first amended complaint in the Heller action is
brought as a purported  derivative  action,  and asserts  claims for among other
things  breach  of  fiduciary  duty;  unfair  competition;   conversion,  unjust
enrichment;  and judicial  dissolution.  Plaintiffs in the Nuanes action filed a
motion to  consolidate  the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed  without  leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the General Partner and affiliated defendants
moved to strike the first  amended  complaint in its entirety for  violating the
Court's  July 10, 2001 order  granting  in part and denying in part  defendants'
demurrer in the Nuanes action, or  alternatively,  to strike certain portions of
the  complaint  based on the statute of  limitations.  Other  defendants  in the
action demurred to the fourth amended complaint,  and,  alternatively,  moved to
strike  the  complaint.  The  matters  are  currently  scheduled  to be heard on
November 15, 2001.

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

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


ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

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

The Partnership's investment properties at September 30, 2001 consisted 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, 2001 and 2000:

                                                   Average Occupancy
      Property                                      2001       2000

      Cedar Rim                                     90%        93%
        New Castle, Washington
      Hidden Cove by the Lake                       88%        94%
        Belleville, Michigan
      Lamplighter Park                              94%        97%
        Bellevue, Washington
      Park Capital                                  92%        95%
        Salt Lake City, Utah
      Sandpiper I and II                            96%        97%
        St. Petersburg, Florida
      Tamarac Village I, II, III, IV                94%        97%
        Denver, Colorado
      Williamsburg Manor                            95%        97%
        Cary, North Carolina

The  General  Partner  attributes  the  decrease  in  occupancy  at Cedar Rim to
increased  job layoffs and home  purchases.  The decrease in occupancy at Hidden
Cove by the Lake is due to several units being repaired for water leaks that are
unleasable and more stringent tenant screening at the property.  The decrease in
occupancy at Lamplighter Park is due to layoffs and increased competition in the
area of the  property.  The  decrease  in  occupancy  at Park  Capital is due to
decreased  traffic due to the  permanent  closing of the main street access from
downtown  Salt  Lake City to the  complex  and  increased  home  purchases.  The
decrease in occupancy at Tamarac  Village is due to  increased  home  purchases,
layoffs, and competition in the area of the property.

Results of Operations

The Partnership had net income of  approximately  $1,598,000 for the nine months
ended  September  30, 2001  compared to  approximately  $2,194,000  for the nine
months ended September 30, 2000. The Partnership had net income of approximately
$293,000 for the three months ended September 30, 2001 compared to approximately
$744,000  for the three  months ended  September  30, 2000.  The decrease in net
income for the nine month period ended  September 30, 2001 is due to an increase
in total expenses and the recognition during the nine months ended September 30,
2001 of an extraordinary  loss on early  extinguishment of debt partially offset
by an increase in total revenues. The decrease in net income for the three month
period  ended  September  30,  2001 is due to a decrease in total  revenues,  an
increase in total expenses,  and the  recognition  during the three months ended
September 30, 2001 of an extraordinary loss on early extinguishment of debt. The
extraordinary  loss on early  extinguishment  of debt for the nine months  ended
September  30, 2001 relates to the  refinancings  of the  mortgages  encumbering
Tamarac Village, Lamplighter Park, Cedar Rim, and Hidden Cove (see discussion in
"Liquidity   and  Capital   Resources").   The   extraordinary   loss  on  early
extinguishment  of debt for the three months ended September 30, 2001 relates to
the refinancings of the mortgages encumbering Cedar Rim and Hidden Cove.

Total revenues  increased for the nine month period ended September 30, 2001 due
to increases in both rental and other income.  Total revenues  decreased for the
three month period ended  September 30, 2001 due to decreases in both rental and
other income.  Rental income increased for the nine month period ended September
30,  2001 due to  increased  average  rental  rates at all of the  Partnership's
properties  and reduced bad debt expenses at Tamarac  Village,  Hidden Cove, and
Park  Capital  which more than offset the  decreases  in occupancy at all of the
Partnership's  properties and increased concession costs primarily at Cedar Rim,
Lamplighter,  Sandpiper I & II, and Tamarac Village. Rental income decreased for
the three month period ended September 30, 2001 due to decreases in occupancy at
all of the Partnership's  properties and increased concession costs primarily at
Cedar Rim,  Lamplighter,  Sandpiper  I and II , and  Tamarac  Village  partially
offset by increased average rental rates at all of the Partnership's properties.
Other  income  increased  for the nine months  ended  September  30, 2001 due to
increased utility reimbursements primarily at Tamarac Village,  Lamplighter Park
and Sandpiper I & II and  increased  corporate  apartment  rental income at Park
Capital  partially  offset by a decrease in interest income due to lower average
cash balances in interest bearing accounts. Other income decreased for the three
month period ended September 30, 2001 due to decreased utility income at Tamarac
Village and  decreased  interest  income due to lower  average cash  balances in
interest bearing accounts.

Total expenses  increased for the nine month period ended September 30, 2001 due
primarily  to  increased  operating,  deprecation,  interest,  and  property tax
expenses  partially  offset by decreased  general and  administrative  expenses.
Total expenses increased for the three month period ended September 30, 2001 due
primarily  to increased  operating  and interest  expenses  partially  offset by
decreased  property  tax and  general  and  administrative  expenses.  Operating
expenses  increased  due to  increased  utility  expenses  primarily  at Tamarac
Village,  increased insurance expense at all of the Partnership's properties and
increased management fees due to increased rental revenues,  partially offset by
reduced payroll related costs primarily at Tamarac Village and Lamplighter Park.
Depreciation  expense increased for the nine months ended September 30, 2001 due
to capital  improvements  completed  during the past twelve months which are now
being depreciated. Interest expense increased due to the refinancings of Tamarac
Village  Apartments,  Lamplighter  Park  Apartments,  Cedar Rim Apartments,  and
Hidden Cove  Apartments,  which  increased  the debt balance at the  properties.
Property  tax expense  increased  for the nine months ended  September  30, 2001
primarily due to an increased  assessed value at Tamarac  Village.  Property tax
expense decreased for the three months ended September 30, 2001 primarily due to
a tax refund received at Williamsburg  Manor Apartments during 2001. General and
administrative  expenses decreased due to a decrease in legal expenses which was
partially  offset  by an  increase  in the  cost  of  services  included  in the
management   reimbursements   to  the  General  Partner  as  allowed  under  the
Partnership Agreement.  Also included in general and administrative  expenses at
September 30, 2001 and 2000 are costs  associated  with the quarterly and annual
communications  with  investors  and  regulatory  agencies  and the annual audit
required by the Partnership Agreement.

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,  due to changing  market
conditions,  which  can  result  in the use of  rental  concessions  and  rental
reductions to offset softening market conditions, there is no guarantee that the
General Partner will be able to sustain such a plan.

Liquidity and Capital Resources

At  September  30,  2001,  the  Partnership  held cash and cash  equivalents  of
approximately  $2,583,000 compared to approximately  $4,165,000 at September 30,
2000.  The  increase  in cash and cash  equivalents  for the nine  months  ended
September  30,  2001 from the  Partnership's  year ended  December  31, 2000 was
approximately $573,000. This increase is due to approximately $3,936,000 of cash
provided by operating  activities  which was partially  offset by  approximately
$1,329,000 of cash used in investing activities and approximately  $2,034,000 of
cash used in financing  activities.  Cash used in investing activities consisted
of property  improvements  and  replacements  which were slightly  offset by net
receipts from restricted escrows maintained by the mortgage lender and insurance
proceeds received.  Cash used in financing activities consisted of the repayment
of the  mortgages  encumbering  Tamarac  Village  Apartments,  Lamplighter  Park
Apartments,  Cedar Rim Apartments, and Hidden Cove Apartments,  loan costs paid,
distributions  to  partners,  and payments of  principal  made on the  mortgages
encumbering the Partnership's properties which were partially offset by proceeds
received from the  refinancings  of the mortgages  encumbering  Tamarac  Village
Apartments,  Lamplighter Park Apartments,  Cedar Rim Apartments, and Hidden Cove
Apartments.  The Partnership  invests its working  capital  reserves in interest
bearing accounts.

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

Cedar Rim

During the nine months ended  September  30,  2001,  the  Partnership  completed
approximately  $110,000 of budgeted and non-budgeted capital improvements at the
property,  consisting primarily of appliances,  structural improvements,  carpet
and vinyl replacements,  parking lot resurfacing, and interior decoration. These
improvements were funded from replacement  reserves and operating cash flow. The
Partnership  has  budgeted,  but is not  limited  to,  capital  improvements  of
approximately  $50,000,  consisting  primarily of carpet and vinyl replacements,
interior upgrades, and swimming pool improvements.  Additional  improvements may
be considered and will depend on the physical  condition of the property as well
as replacement reserves and anticipated cash flow generated by the property.

Hidden Cove by the Lake

During the nine months ended  September  30,  2001,  the  Partnership  completed
approximately  $100,000 of capital improvements,  consisting primarily of carpet
and vinyl replacements, swimming pool improvements, countertop replacements, air
conditioning unit replacement,  and structural improvements.  These improvements
were funded from replacement reserves.  The Partnership has budgeted, but is not
limited to, capital improvements of approximately $175,000, consisting primarily
of water  submetering,  door replacements,  swimming pool improvements,  grounds
lighting, and carpet replacement.  Additional improvements may be considered and
will depend on the physical  condition  of the  property as well as  replacement
reserves and anticipated cash flow generated by the property.

Lamplighter Park

During the nine months ended  September  30,  2001,  the  Partnership  completed
approximately  $125,000  of  budgeted  and  non-budgeted  capital  improvements,
consisting  primarily of grounds lighting,  window treatments,  carpet and vinyl
replacements,  appliances and structural  improvements.  These improvements were
funded from replacement reserves,  insurance proceeds,  and operating cash flow.
The  Partnership  has budgeted,  but is not limited to, capital  improvements of
approximately  $93,000,  consisting  primarily of plumbing upgrades,  carpet and
vinyl  replacements,  pool  improvements,  appliances and heating  improvements.
Additional  improvements  may be  considered  and will  depend  on the  physical
condition of the property as well as replacement  reserves and anticipated  cash
flow generated by the property.

Park Capital

During the nine months ended  September  30,  2001,  the  Partnership  completed
approximately   $243,000  of  capital  improvements,   consisting  primarily  of
structural  improvements,  appliances,  office computers,  electrical  upgrades,
cabinet  replacements,   signage,  and  carpet  and  vinyl  replacements.  These
improvements were funded from operating cash flow. The Partnership has budgeted,
but  is  not  limited  to,  capital  improvements  of  approximately   $282,000,
consisting  primarily  of carpet  and  vinyl  replacements,  major  landscaping,
structural  improvements,   and  appliances.   Additional  improvements  may  be
considered and will depend on the physical  condition of the property as well as
replacement reserves and anticipated cash flow generated by the property.

Tamarac Village

During the nine months ended  September  30,  2001,  the  Partnership  completed
approximately   $538,000  of  capital  improvements,   consisting  primarily  of
electrical   upgrades,   carpet  and  vinyl   replacements,   roof  replacement,
appliances,  cabinet replacements,  lighting upgrades,  structural improvements,
garage and carport  improvements,  and interior  decoration.  These improvements
were funded from  replacement  reserves and operating cash flow. The Partnership
has  budgeted,  but is not limited to,  capital  improvements  of  approximately
$991,000, consisting primarily of carpet replacements,  remodeling and upgrading
the clubhouse,  installing a double set of doors at the ATM machine,  structural
improvements,  and roof replacements.  Additional improvements may be considered
and will depend on the physical condition of the property as well as replacement
reserves and anticipated cash flow generated by the property.

Williamsburg Manor

During the nine months ended  September  30,  2001,  the  Partnership  completed
approximately  $117,000  of  budgeted  and  non-budgeted  capital  improvements,
consisting  primarily of plumbing  fixtures,  cabinet  replacements,  carpet and
vinyl   replacements,   water  heater   replacements,   air  conditioning   unit
replacements,  and structural improvements.  These improvements were funded from
replacement reserves and operating cash flow. The Partnership has budgeted,  but
is not limited to, capital  improvements of  approximately  $99,000,  consisting
primarily of air conditioning unit replacement,  window  treatments,  and carpet
and vinyl  replacements.  Additional  improvements  may be  considered  and will
depend on the physical condition of the property as well as replacement reserves
and anticipated cash flow generated by the property.

Sandpiper I and II

During the nine months ended  September  30,  2001,  the  Partnership  completed
approximately  $203,000  of capital  improvements  consisting  primarily  of air
conditioning  unit  replacements,  carpet  and  vinyl  replacements,  structural
improvements, recreational facility improvements, appliances, plumbing fixtures,
and cabinet  replacements.  These  improvements  were  funded  from  replacement
reserves and operating  cash flow.  The  Partnership  has  budgeted,  but is not
limited to, capital improvements of approximately $296,000, consisting primarily
of  exterior  painting,  cabinet  replacements,  carpet and vinyl  replacements,
signage,  air conditioning unit replacements and fitness  equipment.  Additional
improvements may be considered and will depend on the physical  condition of the
property as well as replacement  reserves and anticipated cash flow generated by
the property.

The additional  capital  expenditures will be incurred only if cash is available
from operations or from Partnership  reserves.  To the extent that such budgeted
capital improvements are required, the Registrant's  distributable cash flow, if
any, may be adversely affected.

On June 27, 2001, the Partnership  refinanced the mortgage  encumbering  Tamarac
Village. The refinancing replaced indebtedness of approximately  $9,400,000 with
a new mortgage of $21,000,000.  The new mortgage  carries a stated interest rate
of 7.45% as compared to the 7.33% interest rate on the old mortgage. Payments on
the  mortgage  loan are due  monthly  until the loan  matures on July 1, 2021 at
which time the loan will be fully  amortized.  In addition,  the Partnership was
required to establish a repair escrow of approximately  $136,000 with the lender
for  certain   capital   replacements.   Total   capitalized   loan  costs  were
approximately  $604,000 at September  30, 2001.  The  Partnership  recognized an
extraordinary loss on the early extinguishment of debt of approximately  $66,000
due to the write-off of unamortized loan costs.

On  June  29,  2001,  the  Partnership   refinanced  the  mortgage   encumbering
Lamplighter  Park.  The  refinancing  replaced   indebtedness  of  approximately
$3,500,000 with a new mortgage of $8,000,000.  The new mortgage carries a stated
interest  rate of  7.48%  as  compared  to the  7.33%  interest  rate on the old
mortgage.  Payments on the mortgage  loan are due monthly until the loan matures
on July 1, 2021 at which time the loan will be fully amortized. In addition, the
Partnership  was required to establish a repair escrow of  approximately  $2,000
with the lender for certain capital  replacements.  Total capitalized loan costs
were approximately $247,000 at September 30, 2001. The Partnership recognized an
extraordinary loss on the early extinguishment of debt of approximately  $34,000
due to the write-off of unamortized loan costs.

On July 23, 2001, the Partnership  refinanced the mortgage encumbering Cedar Rim
Apartments.  The refinancing replaced  indebtedness of approximately  $2,000,000
with a new mortgage of $5,000,000.  The new mortgage  carries a stated  interest
rate of  7.49% as  compared  to the  7.33%  interest  rate on the old  mortgage.
Payments on the mortgage  loan are due monthly  until the loan matures on August
1, 2021 at which time the loan will be fully amortized.  Total  capitalized loan
costs were  approximately  $166,000  at  September  30,  2001.  The  Partnership
recognized  an  extraordinary  loss  on the  early  extinguishment  of  debt  of
approximately $28,000 due to the write-off of unamortized loan costs.

On September  19, 2001,  the  Partnership  refinanced  the mortgage  encumbering
Hidden Cove Apartments.  The refinancing replaced  indebtedness of approximately
$2,200,000 with a new mortgage of $2,860,000.  The new mortgage carries a stated
interest  rate of  6.81%  as  compared  to the  7.33%  interest  rate on the old
mortgage.  Payments on the mortgage  loan are due monthly until the loan matures
on October 1, 2021 at which time the loan will be fully amortized.  In addition,
the  Partnership  was  required to  establish a repair  escrow of  approximately
$152,000 with the lender for certain  capital  replacements.  Total  capitalized
loan costs were  approximately  $120,000 at September 30, 2001. The  Partnership
recognized  an  extraordinary  loss  on the  early  extinguishment  of  debt  of
approximately $28,000 due to the write-off of unamortized loan costs.

The Partnership's  current assets are thought to be sufficient for any near-term
needs (exclusive of capital  improvements) of the Registrant.  The Partnership's
mortgage  indebtedness of  approximately  $36,745,000  requires monthly payments
until the loans  mature  between  July 2021 and  October  2021 at which time the
loans will be fully amortized.  The Partnership's other mortgage indebtedness of
$10,825,000  requires  interest only payments and has maturity dates of December
2005, with balloon payments due at maturity. The General Partner will attempt to
refinance such  indebtedness  and/or sell the properties  prior to such maturity
dates. If the properties  cannot be refinanced or sold for a sufficient  amount,
the Registrant may risk losing such properties through foreclosure.

During the nine months ended  September  30,  2001,  the  Partnership  paid cash
distributions of  approximately  $20,542,000  (approximately  $20,337,000 to the
limited partners or $53.09 per limited  partnership unit) of which approximately
$2,884,000  (approximately  $2,855,000  to the  limited  partners  or $7.45  per
limited  partnership  unit) was from  operations and  approximately  $17,658,000
(approximately  $17,482,000  to the  limited  partners  or  $45.64  per  limited
partnership unit) was from refinancing  proceeds of Tamarac Village  Apartments,
Lamplighter  Park  Apartments,  and Cedar Rim Apartments.  The Partnership  paid
distributions  of cash generated  from  operations of  approximately  $4,358,000
(approximately  $4,314,000  to  the  limited  partners  or  $11.26  per  limited
partnership unit) during the nine months ended September 30, 2000. Subsequent to
September 30, 2001,  the General  Partner  declared and paid a  distribution  of
approximately  $1,834,000  (approximately  $1,816,000 to the limited partners or
$4.74  per  limited   partnership  unit)  of  which   approximately   $1,107,000
(approximately   $1,096,000  to  the  limited  partners  or  $2.86  per  limited
partnership unit) was from operations and approximately $727,000  (approximately
$720,000 to the limited partners or $1.88 per limited partnership unit) was from
refinancing  proceeds  of  Hidden  Cove and Cedar Rim  Apartments.  Future  cash
distributions  will  depend on the  levels of cash  generated  from  operations,
timing  of  debt  maturities,  refinancings,  and/or  property  sales,  and  the
availability of cash reserves. The Partnership's distribution policy is reviewed
on a monthly basis.  There can be no assurance,  however,  that the  Partnership
will  generate   sufficient   funds  from  operations   after  required  capital
expenditures  to  permit  further  distributions  to  its  partners  during  the
remainder of 2001 or subsequent periods.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership,   AIMCO  and  its  affiliates   currently  own  196,772.90  limited
partnership  units in the  Partnership  representing  51.37% of the  outstanding
units at September 30, 2001. 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 make one or more additional offers to acquire additional limited
partnership  interests in the  Partnership  for cash or in exchange for units in
the operating partnership of AIMCO. Under the Partnership Agreement, unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters  which  would  include  voting on certain  amendments  to the
Partnership  Agreement and voting to remove the General Partner.  As a result of
its  ownership  of 51.37% of the  outstanding  units,  AIMCO is in a position to
control all such voting decisions with respect to the Registrant. When voting on
matters,  AIMCO would in all  likelihood  vote the Units it acquired in a manner
favorable to the interest of the General Partner because of its affiliation with
the General Partner.

<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 purports to
assert  claims on behalf of a class of  limited  partners  and  derivatively  on
behalf of a number of limited partnerships (including the Partnership) which are
named as nominal defendants, challenging, among other things, the acquisition of
interests in certain general partner entities by Insignia  Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia;  past
tender offers by the Insignia  affiliates to acquire limited  partnership units;
management of the  partnerships  by the Insignia  affiliates;  and the series of
transactions  which  closed on October 1, 1998 and  February  26,  1999  whereby
Insignia and Insignia  Properties Trust,  respectively,  were merged into AIMCO.
The plaintiffs seek monetary damages and equitable  relief,  including  judicial
dissolution of the  Partnership.  On June 25, 1998, the General  Partner filed a
motion seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs  filed an amended  complaint.  The General Partner filed demurrers to
the amended complaint which were heard February 1999.

Pending the ruling on such  demurrers,  settlement  negotiations  commenced.  On
November 2, 1999,  the parties  executed and filed a Stipulation  of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  at which time
the Court set a final  approval  hearing for  December  10,  1999.  Prior to the
December  10,  1999  hearing,  the  Court  received  various  objections  to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement.  On
December  14,  1999,  the General  Partner  and its  affiliates  terminated  the
proposed settlement.  In February 2000, counsel for some of the named plaintiffs
filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated
the settlement.  On June 27, 2000, the Court entered an order disqualifying them
from the case and an appeal was taken  from the order on  October  5,  2000.  On
December 4, 2000, the Court  appointed the law firm of Lieff Cabraser  Heimann &
Bernstein  LLP as new  lead  counsel  for  plaintiffs  and the  putative  class.
Plaintiffs  filed a third  amended  complaint on January 19,  2001.  On March 2,
2001,  the  General  Partner  and its  affiliates  filed a demurrer to the third
amended  complaint.  On May 14, 2001,  the Court heard the demurrer to the third
amended  complaint.  On July 10,  2001,  the Court  issued  an order  sustaining
defendants'  demurrer on certain grounds.  On July 20, 2001,  plaintiffs filed a
motion for  reconsideration  of the Court's July 10, 2001 order granting in part
and denying in part defendants' demurrer. On September 7, 2001, plaintiffs filed
a fourth amended class and derivative action  complaint.  On September 12, 2001,
the Court denied plaintiffs' motion for reconsideration. On October 5, 2001, the
General Partner and affiliated defendants filed a demurrer to the fourth amended
complaint,  which,  together  with a  demurrer  filed  by other  defendants,  is
currently  scheduled  to be heard on November  15,  2001.  The Court has set the
matter for trial in January 2003.

During the third  quarter of 2001, a complaint  (the "Heller  action") was filed
against  the same  defendants  that are named in the  Nuanes  action,  captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended  complaint.  The first amended complaint in the Heller action is
brought as a purported  derivative  action,  and asserts  claims for among other
things  breach  of  fiduciary  duty;  unfair  competition;   conversion,  unjust
enrichment;  and judicial  dissolution.  Plaintiffs in the Nuanes action filed a
motion to  consolidate  the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed  without  leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the General Partner and affiliated defendants
moved to strike the first  amended  complaint in its entirety for  violating the
Court's  July 10, 2001 order  granting  in part and denying in part  defendants'
demurrer in the Nuanes action, or  alternatively,  to strike certain portions of
the  complaint  based on the statute of  limitations.  Other  defendants  in the
action demurred to the fourth amended complaint,  and,  alternatively,  moved to
strike  the  complaint.  The  matters  are  currently  scheduled  to be heard on
November 15, 2001.

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

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

    a)    Exhibits:

          Exhibit  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.

    b)    Reports on Form 8-K filed during the quarter ended September 30, 2001:

          None.


<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/Patrick J. Foye
                                          Patrick J. Foye
                                          Executive Vice President


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


                                    Date:

<PAGE>
                                                        FHLMC Loan No. 002738341
                                                          Hidden Cove Apartments

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


US $2,860,000.00                                      As of September 18, 2001


      FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if
more  than  one)  promises  to pay to the  order  of  GMAC  COMMERCIAL  MORTGAGE
CORPORATION,  a California  corporation,  the principal sum of Two Million Eight
Hundred Sixty Thousand and 00/100 Dollars (US  $2,860,000.00),  with interest on
the unpaid principal balance at the annual rate of Six and Eighty One Hundredths
percent (6.81%).

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

2. Address for Payment. All payments due under this Note shall be payable at 200
Witmer Road, Post Office Box 809, Horsham, Pennsylvania 19044, Attn: Servicing -
Account  Manager,  or such other place as may be designated by written notice to
Borrower from or on behalf of Lender.

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

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

(b)  Consecutive  monthly  installments  of principal and interest,  each in the
amount of Twenty One Thousand  Eight Hundred Forty Eight and 55/100  Dollars (US
$21,848.55),  shall be  payable  on the first  day of each  month  beginning  on
November 1, 2001,  until the entire unpaid principal  balance  evidenced by this
Note is fully paid.

(c) Any accrued interest remaining past due for 30 days or more may, at Lender's
discretion,  be added to and become  part of the unpaid  principal  balance  and
shall  bear  interest  at the  rate or rates  specified  in this  Note,  and any
reference below to "accrued  interest" shall refer to accrued interest which has
not become part of the unpaid  principal  balance.  Any remaining  principal and
interest  shall be due and payable on October 1, 2021 or on any earlier  date on
which the unpaid  principal  balance of this Note  becomes due and  payable,  by
acceleration or otherwise (the "Maturity  Date").  The unpaid principal  balance
shall  continue to bear interest after the Maturity Date at the Default Rate set
forth in this Note until and including the date on which it is paid in full.

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

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

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

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

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

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

9.    Limits on Personal Liability.

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

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

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

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

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

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

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

10.   Voluntary and Involuntary Prepayments.

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

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

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

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

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

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

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

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

            (ii)  the product obtained by multiplying:

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

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

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

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

            Assumed  Reinvestment Rate:  one-twelfth (1/12) of the yield rate as
            of the date 5 Business Days before the Prepayment Date, on the 9.25%
            U.S. Treasury Security due February 1, 2016, as reported in The Wall
            Street Journal, expressed as a decimal calculated to five digits. In
            the event that no yield is published on the applicable  date for the
            Treasury Security used to determine the Assumed  Reinvestment  Rate,
            Lender,  in its discretion,  shall select the non-callable  Treasury
            Security  maturing  in  the  same  year  as  the  Treasury  Security
            specified  above with the lowest yield  published in The Wall Street
            Journal as of the applicable  date. If the publication of such yield
            rates in The Wall  Street  Journal is  discontinued  for any reason,
            Lender  shall select a security  with a comparable  rate and term to
            the Treasury  Security  used to determine  the Assumed  Reinvestment
            Rate.  The  selection  of an  alternate  security  pursuant  to this
            Paragraph shall be made in Lender's discretion.

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

                                     [OBJECT OMITTED]

            n = number of months remaining in Yield Maintenance Period

            ARR = Assumed Reinvestment Rate

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

            -----
             X       Exhibit A     Modifications to Multifamily Note
            -----

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



<PAGE>



                                  CONSOLIDATED CAPITAL INSTITUTIONAL
                                  PROPERTIES/3, a California limited partnership

                                    By: CONCAP Equities, Inc., a Delaware
                                        corporation, its general partner




                                        By:  ________________________
                                            Patti K. Fielding
                                            Senior Vice President



                                   942382571
                                   Borrower's Social Security/Employer ID Number

<PAGE>


PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE  CORPORATION,  WITHOUT  RECOURSE,
THIS __ DAY OF SEPTEMBER 2001.

GMAC COMMERCIAL MORTGAGE CORPORATION, a
   California corporation



By:_________________________________
   Robert D. Falese, III
   Vice President


<PAGE>



                                    EXHIBIT A

                        MODIFICATIONS TO MULTIFAMILY NOTE

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

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

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

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

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

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