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

                                   Form 10-QSB

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

                 For the quarterly period ended June 30, 2002


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

           For the transition period from __________ to __________

                         Commission file number 0-10673


                       REAL ESTATE ASSOCIATES LIMITED III
                       (A California Limited Partnership)


          California                                             95-3547611
(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
                           (Issuer's telephone number)


                         9090 Wilshire Blvd., Suite 201,
                       Beverly Hills, California 90211
               (Address of former principal executive offices)

<PAGE>




                       REAL ESTATE ASSOCIATES LIMITED III
                      (a California limited partnership)

                              INDEX TO FORM 10-QSB

                     FOR THE QUARTER ENDED JUNE 30, 2002




PART I.     FINANCIAL INFORMATION

      ITEM 1.     FINANCIAL STATEMENTS

                  Balance Sheet,
                    June 30, 2002                                              1

                  Statements of Operations
                    Three and Six Months Ended June 30, 2002 and 2001          2

                  Statement of Partners' (Deficiency) Equity,
                    Six Months Ended June 30, 2002                             3

                  Statements of Cash Flows
                    Six Months Ended June 30, 2002 and 2001                    4

                  Notes to Financial Statements                                5

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION         10


PART II.    OTHER INFORMATION

      ITEM 1.     LEGAL PROCEEDINGS                                           12

      ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K                            13

      SIGNATURES                                                              14

      EXHIBIT                                                                 15

<PAGE>

                         PART I - FINANCIAL INFORMATION


ITEM 1.     FINANCIAL STATEMENTS



                       REAL ESTATE ASSOCIATES LIMITED III
                      (a California limited partnership)

                                  BALANCE SHEET

                                  JUNE 30, 2002
                                   (Unaudited)



                             ASSETS

Investments in limited partnerships (Note 2)                     $   102,078
Cash and cash equivalents                                          2,052,800

            Total assets                                         $ 2,154,878

         LIABILITIES AND PARTNERS' (DEFICIENCY) EQUITY

Liabilities:
   Accounts payable and accrued expenses                         $    71,627
   Advances due to affiliates                                          4,750
                                                                      76,377
Commitments and Contingencies (Notes 3 and 4)

Partners' (Deficiency) Equity:
   General partners                                                 (148,192)
   Limited partners                                                2,226,693
                                                                   2,078,501
            Total liabilities and partners' equity               $ 2,154,878

  The accompanying notes are an integral part of these financial statements.


<PAGE>


                       REAL ESTATE ASSOCIATES LIMITED III
                      (a California limited partnership)

                            STATEMENTS OF OPERATIONS

          FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001
                                   (Unaudited)

<TABLE>
<CAPTION>

                                              Three Months Ended            Six Months Ended
                                                   June 30,                     June 30,
                                              2002          2001           2002          2001

<S>                                       <C>           <C>           <C>            <C>
INTEREST AND OTHER INCOME                 $     8,271   $    49,772   $    15,625    $    118,850

OPERATING EXPENSES:
  Management fees - partners (Note 3)          32,296        32,322        64,619          64,645
  General and administrative (Note 3)           9,460        29,226        49,375          39,588
  Legal and accounting                         35,242       201,313        68,384         217,613
        Total operating expenses               76,998       262,861       182,378         321,846

Loss from Partnership operations              (68,727)     (213,089)     (166,753)       (202,996)
Distributions from limited partnerships
  recognized as income (Note 2)                    --            --        33,903          21,925
Equity in (loss) income of limited
  partnerships and amortization of
  acquisition costs (Note 2)                 (153,301)       56,475      (307,922)        109,475

Net loss                                  $  (222,028)  $  (156,614)   $ (440,772)    $   (71,596)
Net loss allocated to general partners
 (1%)                                     $    (2,220)  $    (1,566)   $   (4,408)    $      (716)
Net loss allocated to limited partners
 (99%)                                       (219,808)     (155,048)     (436,364)        (70,880)

                                          $  (222,028)  $  (156,614)   $ (440,772)    $   (71,596)
Net loss per limited partnership
  interest (Note 1)                       $       (19)  $       (14)   $      (38)    $        (6)

  The accompanying notes are an integral part of these financial statements.

</TABLE>

<PAGE>


                       REAL ESTATE ASSOCIATES LIMITED III
                      (a California limited partnership)

                  STATEMENT OF PARTNERS' (DEFICIENCY) EQUITY

                    FOR THE SIX MONTHS ENDED JUNE 30, 2002
                                   (Unaudited)

<TABLE>
<CAPTION>

                                        General          Limited
                                       Partners          Partners          Total

<S>                                                        <C>
Partnership interests                                      11,456

Partners' (deficiency) equity,
  January 1, 2002                     $ (143,784)       $2,663,057       $2,519,273

Net loss for the six months
  ended June 30, 2002                     (4,408)         (436,364)        (440,772)

Partners' (deficiency) equity,
  June 30, 2002                       $ (148,192)       $2,226,693       $2,078,501


  The accompanying notes are an integral part of these financial statements.

</TABLE>

<PAGE>

                       REAL ESTATE ASSOCIATES LIMITED III
                      (a California limited partnership)

                            STATEMENTS OF CASH FLOWS

               FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
                                   (Unaudited)
<TABLE>
<CAPTION>

<S>                                                                <C>             <C>
                                                                   2002            2001
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                     $ (440,772)     $ (71,596)
  Adjustments to reconcile net loss to net cash
   used in operating activities:
     Equity in loss (income) of limited partnerships and
      amortization of acquisition costs                           307,922        (109,475)
     Decrease in interest and other payables                           --         170,991
     Increase in advances due to affiliates                           250              --
     Increase in accounts payable and accrued expenses              7,169              --
         Net cash used in operating activities                   (125,431)        (10,080)

NET DECREASE IN CASH AND CASH EQUIVALENTS                        (125,431)        (10,080)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                  2,178,231       5,655,763

CASH AND CASH EQUIVALENTS, END OF PERIOD                      $ 2,052,800     $ 5,645,683


  The accompanying notes are an integral part of these financial statements.

</TABLE>

<PAGE>

                       REAL ESTATE ASSOCIATES LIMITED III
                      (a California limited partnership)

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 2002

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

The information  contained in the following notes to the financial statements is
condensed  from  that  which  would  appear  in  the  annual  audited  financial
statements;  accordingly,  the financial  statements  included  herein should be
reviewed in conjunction with the financial  statements and related notes thereto
contained in the Real Estate Associates Limited III (the  "Partnership")  annual
report for the year ended December 31, 2001. Accounting  measurements at interim
dates  inherently  involve  greater  reliance on estimates than at year end. The
results of  operations  for the interim  period  presented  are not  necessarily
indicative of the results for the entire year.

In  the  opinion  of  the  Partnership,  the  accompanying  unaudited  financial
statements  contain all adjustments  (consisting  primarily of normal  recurring
accruals) necessary to present fairly the financial position as of June 30, 2002
and the  results of  operations  and changes in cash flows for the three and six
months then ended.

The general  partners  have a one percent  interest in profits and losses of the
Partnership.  The limited  partners have the remaining 99 percent interest which
is allocated in  proportion  to their  respective  individual  investments.  The
general  partner  of  the  Partnership  is  National   Partnership   Investments
Corporation  ("NAPICO" or the "Managing  General  Partner").  Prior to March 11,
2002, Casden  Properties Inc. owned a 95.25% economic  interest in NAPICO,  with
the balance owned by Casden Investment Corporation ("CIC"). CIC, which is wholly
owned by Alan I. Casden, owned 95% of the voting common stock of NAPICO prior to
March 11, 2002.

On December 3, 2001,  Casden  Properties Inc.,  entered into a merger agreement
and certain other transaction documents with Apartment Investment and Management
Company,  a Maryland  corporation  ("AIMCO")  and  certain of its  subsidiaries,
pursuant to which, on March 11, 2002, AIMCO acquired Casden  Properties Inc. and
its subsidiaries, including 100% of the stock of NAPICO.

Basis of Presentation

The  accompanying  financial  statements  have been prepared in conformity  with
accounting principles generally accepted in the United States of America.

Method of Accounting for Investment in Limited Partnerships

The  investment in limited  partnerships  is accounted for on the equity method.
Acquisition,  selection  and  other  costs  related  to the  acquisition  of the
projects  are  capitalized  as  part of the  investment  account  and are  being
amortized on a straight  line basis over the estimated  lives of the  underlying
assets, which is generally 30 years.

Net Loss Per Limited Partnership Interest

Net loss per limited  partnership  interest was computed by dividing the limited
partners'  share of net loss by the  number  of  limited  partnership  interests
outstanding during the period. The number of limited  partnership  interests was
11,456 for the periods presented.

Cash and Cash Equivalents

Cash and cash  equivalents  consist of cash and money market mutual  funds.  The
Partnership  has its cash and cash  equivalents  on deposit  primarily  with two
money market mutual funds. Such cash and cash equivalents are uninsured.

Impairment of Long-Lived Assets

The  Partnership  reviews  long-lived  assets to determine if there has been any
permanent  impairment whenever events or changes in circumstances  indicate that
the  carrying  amount  of the asset  may not be  recoverable.  If the sum of the
expected future cash flows is less than the carrying  amount of the assets,  the
Partnership recognizes an impairment loss.

NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS

As of June 30, 2002, the Partnership holds limited  partnership  interests in 12
limited  partnerships.  The  limited  partnerships  as  of  June  30,  2002  own
residential low income rental projects  consisting of 1,182 apartment units. The
mortgage  loans  for  these  projects  are  payable  to or  insured  by  various
governmental agencies.

The Partnership,  as a limited partner,  is entitled to between 94.9 percent and
99 percent of the profits and losses of the limited partnerships it has invested
in directly. The Partnership is also entitled to 99.9 percent of the profits and
losses of Real Estate Associates ("REA"). REA holds a 99 percent interest in the
limited partnership in which it has invested.

Equity  in  losses  of  limited  partnerships  is  recognized  in the  financial
statements until the limited partnership investment account is reduced to a zero
balance.  Losses incurred after the limited  partnership  investment  account is
reduced to zero are not recognized.

Distributions from limited partnerships are recognized as a reduction of capital
until the investment balance has been reduced to zero. Subsequent  distributions
received are recognized as income.

The following is a summary of the investments in Local  Partnerships for the six
months ended June 30, 2002:

           Balance, beginning of period                    $ 410,000
           Amortization acquisition costs                     (1,110)
           Equity in loss of limited partnerships
             costs and fees                                 (306,812)

           Balance, end of period                          $ 102,078

The following are unaudited combined estimated  statements of operations for the
three and six months  ended June 30, 2002 and 2001 for the limited  partnerships
in which the Partnership has investments:
<TABLE>
<CAPTION>

                               Three Months Ended              Six Months Ended
                                    June 30,                       June 30,
                              2002           2001             2002            2001
Revenues
<S>                       <C>             <C>             <C>             <C>
  Rental and other        $ 1,681,000     $ 1,646,000     $ 3,362,000     $ 3,292,000

Expenses
  Depreciation                273,000         320,000         546,000         640,000
  Interest                    367,000         450,000         734,000         900,000
  Operating                 1,384,000       1,003,000       2,768,000       2,006,000

                            2,024,000       1,773,000       4,048,000       3,546,000

Net loss                   $ (343,000)    $ (127,000)      $ (686,000)     $ (254,000)
</TABLE>

Under recent adopted law and policy, the United States Department of Housing and
Urban  Development  ("HUD") has determined  not to renew the Housing  Assistance
Payment  ("HAP")  Contracts  on a  long-term  basis on the  existing  terms.  In
connection with renewals of the HAP Contracts under such new law and policy, the
amount of rental  assistance  payments under renewed HAP Contracts will be based
on market rentals instead of above market  rentals,  which may be the case under
existing HAP Contracts.  The payments under the renewed HAP Contracts may not be
in an amount  that  would  provide  sufficient  cash  flow to  permit  owners of
properties  subject to HAP  Contracts to meet the debt service  requirements  of
existing  loans  insured by the Federal  Housing  Administration  of HUD ("FHA")
unless such mortgage loans are  restructured.  In order to address the reduction
in  payments  under HAP  Contracts  as a result of this new  policy,  the Multi-
family Assisted Housing Reform and Affordability Act of 1997 ("MAHRAA") provides
for the  restructuring  of  mortgage  loans  insured by the FHA with  respect to
properties  subject  to the  Section 8 program.  Under  MAHRAA,  an  FHA-insured
mortgage  loan can be  restructured  into a first  mortgage  loan  which will be
amortized on a current basis and a low interest  second mortgage loan payable to
FHA which will only be payable on  maturity  of the first  mortgage  loan.  This
restructuring results in a reduction in annual debt service payable by the owner
of the  FHA-insured  mortgage  loan and is  expected  to result in an  insurance
payment from FHA to the holder of the  FHA-insured  loan due to the reduction in
the principal amount. MAHRAA also phases out project-based subsidies on selected
properties  serving  families not located in rental markets with limited supply,
converting such subsidies to a tenant-based subsidy.

When the HAP  Contracts are subject to renewal,  there can be no assurance  that
the local limited  partnerships  in which the Partnership has an investment will
be permitted to restructure its mortgage indebtedness under MAHRAA. In addition,
the  economic  impact  on the  Partnership  of the  combination  of the  reduced
payments  under  the  HAP  Contracts  and  the  restructuring  of  the  existing
FHA-insured mortgage loans under MAHRAA is uncertain.

NOTE 3 - MANAGEMENT FEE AND EXPENSES DUE TO GENERAL PARTNER

Under  the  terms  of  the  Restated   Certificate   and  Agreement  of  Limited
Partnership, the Partnership is obligated to NAPICO for an annual management fee
approximately  equal to 0.4 percent of the invested assets.  Invested assets are
defined as the costs of acquiring project interests, including the proportionate
amount of the  mortgage  loans  related to the  Partnership's  interests  in the
capital accounts of the respective partnership.  The management fee incurred for
the  six  months  ended  June  30,  2002  and  2001  was  $64,619  and  $64,645,
respectively.

The Partnership  reimburses NAPICO for certain expenses.  The reimbursement paid
to NAPICO was $7,121  for both of the six months  ended June 30,  2002 and 2001,
and is included in administrative expenses.

NOTE 4 - CONTINGENCIES

On August 27, 1998, two investors holding an aggregate of eight units of limited
partnership  interests in the Partnership and two investors holding an aggregate
of five units of limited partnership  interest in Real Estate Associates Limited
VI (another  affiliated  partnership  in which  NAPICO is the  managing  general
partner) commenced an action in the United States District Court for the Central
District  of  California  against  the  Partnership,  NAPICO and  certain  other
affiliated  entities.  The complaint alleges that the defendants  breached their
fiduciary duty to the limited  partners of certain  NAPICO managed  partnerships
and made materially false and misleading  statements in the consent solicitation
statements  sent to the  limited  partners  of  such  partnerships  relating  to
approval  of the  transfer of  partnership  interests  in limited  partnerships,
owning  certain of the  properties,  to  affiliates of Casden  Properties  Inc.,
organized by an affiliate of NAPICO.  The plaintiffs seek equitable  relief,  as
well as  compensatory  damages and litigation  related costs. On August 4, 1999,
one  investor  holding  one unit of  limited  partnership  interest  in  Housing
Programs Limited (another affiliated partnership in which NAPICO is the managing
general  partner)  commenced a virtually  identical  action in the United States
District Court for the Central  District of California  against the Partnership,
NAPICO  and  certain  other  affiliated  entities.  The  second  action has been
subsumed in the first action,  which has been  certified as a class  action.  On
August 21, 2001,  plaintiffs  filed a  supplemental  complaint,  which added new
claims,  including for a recission of the transfer of partnership  interests and
an  accounting.  Trial is scheduled  for October 1, 2002.  The managing  general
partner of such NAPICO managed  partnerships  and the other  defendants  believe
that the plaintiffs' claims are without merit and are vigorously  contesting the
actions.

Other

Plaintiff, who is a limited partner in the Partnership,  claimed that NAPICO and
other  defendants  (1) had refused to provide the  plaintiff  with access to the
books and  records of the  Partnership,  and (2) had  breached  their  fiduciary
duties and the  partnership  agreement by failing to act in the best interest of
the Partnership.  The defendants had, however,  provided their books and records
to plaintiff  pursuant to a  protective  order.  On May 28,  2002,  the case was
dismissed without prejudice.

Consent Solicitation

In March 2001, a limited  partner of the  Partnership,  which acquired its units
through a tender offer, commenced a consent solicitation to remove NAPICO as the
general partner of the Partnership.  In April 2001, the Partnership commenced an
action to enjoin the solicitation alleging that the information contained in the
solicitation was materially false and misleading and in violation of the federal
securities  laws.  The action has been stayed pending the outcome of the consent
solicitation, which is expected to be determined in August 2002.

The Managing  General Partner of the Partnership is involved in various lawsuits
arising from transactions in the ordinary course of business.  In the opinion of
management and the Managing general  partner,  the claims will not result in any
material liability to the Partnership.

NOTE 5 - FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial  Accounting  Standards  No. 107,  "Disclosure  about Fair
Value of Financial  Instruments,"  requires disclosure of fair value information
about financial instruments. The carrying amount of other assets and liabilities
reported on the balance  sheet that require such  disclosure  approximates  fair
value due to their short-term maturity.

<PAGE>

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

Liquidity and Capital Resources

The  Partnership's  primary sources of funds include interest income earned from
investing  available cash and distributions  from limited  partnerships in which
the Partnership  has invested.  It is not expected that any of the local limited
partnerships  in which the  Partnership  has invested  will  generate  cash flow
sufficient  to provide for  distributions  to limited  partners in any  material
amount.

Results of Operations

Partnership  revenues  consist  primarily of interest income earned on temporary
investment of funds not required for investment in local partnerships.

Operating  expenses consist  primarily of recurring  general and  administrative
expenses and  professional  fees for services  rendered to the  Partnership.  In
addition, an annual Partnership  management fee in an amount equal to .4 percent
of investment assets is payable to the managing general partner.

The Partnership  accounts for its investments in the local limited  partnerships
on  the  equity  method,   thereby  adjusting  its  investment  balance  by  its
proportionate  share of the  income or loss of the local  limited  partnerships.
Losses incurred after the limited  partnership  investment account is reduced to
zero are not recognized in accordance with the equity accounting method.

Distributions  received from limited  partnerships  are  recognized as return of
capital until the  investment  balance has been reduced to zero or to a negative
amount equal to future capital contributions required.  Subsequent distributions
received  are  recognized  as  income.   Overall   distributions   from  limited
partnerships  continue  to be  favorable.  This  primarily  is due  to  improved
operating results at several of the properties.

Except for money  market  funds,  the  Partnership's  investments  are  entirely
interests in other limited  partnerships  owning government  assisted  projects.
Funds  temporarily not required for such investments in projects are invested in
certificate of deposit and money market funds which provide  substantial amounts
of interest as reflected in the statement of operations.  These  investments are
converted to cash to meet obligations as they arise. The Partnership  intends to
continue investing available funds in this manner.

Under recent adopted law and policy, the United States Department of Housing and
Urban  Development  ("HUD") has determined  not to renew the Housing  Assistance
Payment  ("HAP")  Contracts  on a long  term  basis on the  existing  terms.  In
connection with renewals of the HAP Contracts under such new law and policy, the
amount of rental  assistance  payments under renewed HAP Contracts will be based
on market rentals instead of above market  rentals,  which may be the case under
existing HAP Contracts.  The payments under the renewed HAP Contracts may not be
in an amount  that  would  provide  sufficient  cash  flow to  permit  owners of
properties  subject to HAP  Contracts to meet the debt service  requirements  of
existing  loans  insured by the Federal  Housing  Administration  of HUD ("FHA")
unless such mortgage loans are  restructured.  In order to address the reduction
in payments under HAP Contracts as a result of this new policy, the Multi-family
Assisted Housing Reform and  Affordability  Act of 1997 ("MAHRAA")  provides for
the  restructuring  of  mortgage  loans  insured  by the  FHA  with  respect  to
properties  subject  to the  Section 8 program.  Under  MAHRAA,  an  FHA-insured
mortgage  loan can be  restructured  into a first  mortgage  loan  which will be
amortized on a current basis and a low interest  second mortgage loan payable to
FHA which will only be payable on  maturity  of the first  mortgage  loan.  This
restructuring results in a reduction in annual debt service payable by the owner
of the  FHA-insured  mortgage  loan and is  expected  to result in an  insurance
payment from FHA to the holder of the  FHA-insured  loan due to the reduction in
the principal amount. MAHRAA also phases out project-based subsidies on selected
properties  serving  families not located in rental markets with limited supply,
converting such subsidies to a tenant-based subsidy.

When the HAP  Contracts are subject to renewal,  there can be no assurance  that
the local limited  partnerships  in which the Partnership has an investment will
be permitted to restructure its mortgage indebtedness under MAHRAA. In addition,
the  economic  impact  on the  Partnership  of the  combination  of the  reduced
payments  under  the  HAP  Contracts  and  the  restructuring  of  the  existing
FHA-insured mortgage loans under MAHRAA is uncertain.

<PAGE>

                           PART II - OTHER INFORMATION



ITEM 1.     LEGAL PROCEEDINGS

On August 27, 1998, two investors holding an aggregate of eight units of limited
partnership  interests in the Partnership and two investors holding an aggregate
of five units of limited partnership  interest in Real Estate Associates Limited
VI (another  affiliated  partnership  in which  NAPICO is the  managing  general
partner) commenced an action in the United States District Court for the Central
District  of  California  against  the  Partnership,  NAPICO and  certain  other
affiliated  entities.  The complaint alleges that the defendants  breached their
fiduciary duty to the limited  partners of certain  NAPICO managed  partnerships
and made materially false and misleading  statements in the consent solicitation
statements  sent to the  limited  partners  of  such  partnerships  relating  to
approval  of the  transfer of  partnership  interests  in limited  partnerships,
owning  certain of the  properties,  to  affiliates of Casden  Properties  Inc.,
organized by an affiliate of NAPICO.  The plaintiffs seek equitable  relief,  as
well as  compensatory  damages and litigation  related costs. On August 4, 1999,
one  investor  holding  one unit of  limited  partnership  interest  in  Housing
Programs Limited (another affiliated partnership in which NAPICO is the managing
general  partner)  commenced a virtually  identical  action in the United States
District Court for the Central  District of California  against the Partnership,
NAPICO  and  certain  other  affiliated  entities.  The  second  action has been
subsumed in the first action,  which has been  certified as a class  action.  On
August 21, 2001,  plaintiffs  filed a  supplemental  complaint,  which added new
claims,  including for a recission of the transfer of partnership  interests and
an  accounting.  Trial is scheduled  for October 1, 2002.  The managing  general
partner of such NAPICO managed  partnerships  and the other  defendants  believe
that the plaintiffs' claims are without merit and are vigorously  contesting the
actions.

Other

Plaintiff, who is a limited partner in the Partnership,  claimed that NAPICO and
other  defendants  (1) had refused to provide the  plaintiff  with access to the
books and  records of the  Partnership,  and (2) had  breached  their  fiduciary
duties and the  partnership  agreement by failing to act in the best interest of
the Partnership.  The defendants had, however,  provided their books and records
to plaintiff  pursuant to a  protective  order.  On May 28,  2002,  the case was
dismissed without prejudice.

Consent Solicitation

In March 2001, a limited  partner of the  Partnership,  which acquired its units
through a tender offer, commenced a consent solicitation to remove NAPICO as the
general partner of the Partnership.  In April 2001, the Partnership commenced an
action to enjoin the solicitation alleging that the information contained in the
solicitation was materially false and misleading and in violation of the federal
securities  laws.  The action has been stayed pending the outcome of the consent
solicitation, which is expected to be determined in August 2002.

The Managing  General Partner of the Partnership is involved in various lawsuits
arising from transactions in the ordinary course of business.  In the opinion of
management and the Managing general  partner,  the claims will not result in any
material liability to the Partnership.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits:

         Exhibit  3     Restated   Certificate   and   Agreement  of  Limited
                        Partnership herein dated January 5, 1981 incorporated by
                        reference to the Partnership's Form S-11 No. 268983.
         Exhibit 99     Certification  of Chief  Executive  Officer  and Chief
                        Financial Officer.

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

         None.


<PAGE>


                                   SIGNATURES



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


                                    REAL ESTATE ASSOCIATES LIMITED III
                                    (a California limited partnership)


                                    By:   National Partnership Investments Corp.
                                          General Partner


                                    By:   /s/Charles H. Boxenbaum
                                          Charles H. Boxenbaum
                                          Chairman of the Board of Directors
                                          and Chief Executive Officer


                                    By:   /s/Brian H. Shuman
                                          Brian H. Shuman
                                          Chief Financial Officer


                                    Date: August 19, 2002


<PAGE>


Exhibit 99


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



In connection with the Quarterly Report on Form 10-QSB of Real Estate Associates
Limited III (the "Partnership"), for the quarterly period ended June 30, 2002 as
filed with the  Securities  and  Exchange  Commission  on the date  hereof  (the
"Report"),  Charles  H.  Boxenbaum,  as the  equivalent  of the Chief  Executive
Officer of the Partnership,  and Brian H. Shuman, 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/    Charles H. Boxenbaum
                                    Name:  Charles H. Boxenbaum
                                    Date:  August 19, 2002


                                    /s/    Brian H. Shuman
                                    Name:  Brian H. Shuman
                                    Date:  August 19, 2002


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