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

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 March 31, 2002
[   ]	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 0-13810

REAL ESTATE ASSOCIATES LIMITED VII
(A California Limited Partnership)

California
(State or other jurisdiction of
incorporation or organization) 95-3290316
(I.R.S. Employer
Identification No.)

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

(310) 278-2191
(Issuer’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 of 1934 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  [   ]

TABLE OF CONTENTS

BALANCE SHEET
		STATEMENTS OF OPERATIONS
		STATEMENT OF PARTNERS’ DEFICIENCY
		STATEMENTS OF CASH FLOWS
		NOTES TO FINANCIAL STATEMENTS
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
	ITEM 1. LEGAL PROCEEDINGS
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES

REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

INDEX TO FORM 10-QSB

FOR THE QUARTER ENDED MARCH 31, 2002

PART I.	FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Balance Sheet, March 31, 2002	1
		Statements of Operations, Three Months Ended March 31, 2002 and 2001	2
		Statement of Partners’ Deficiency, Three Months Ended March 31, 2002	3
		Statements of Cash Flows, Three Months Ended March 31, 2002 and 2001	4
		Notes to Financial Statements	5
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	11
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	13
	Item 6.	Exhibits and Reports on Form 8-K	13
	Signatures		14

REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

BALANCE SHEET

MARCH 31, 2002
(Unaudited)

ASSETS
INVESTMENTS IN LIMITED PARTNERSHIPS (Note 2)				$	—
CASH					521,887
		TOTAL ASSETS		$	521,887
LIABILITIES AND PARTNERS’ DEFICIENCY
LIABILITIES:
	Notes payable (Note 3)			$	11,374,501
	Accrued interest payable (Note 3)				17,732,957
	Accrued fees and expenses due general partner (Note 4)				649,307
	Accounts payable and other liabilities				101,231
	Due to affiliates (Note 4)				3,630
					29,861,626
COMMITMENTS AND CONTINGENCIES (Notes 4 and 5)
PARTNERS’ DEFICIENCY:
	General partners				(616,528	)
	Limited partners				(28,723,211	)
					(29,339,739	)
			TOTAL LIABILITIES AND PARTNERS’ DEFICIENCY	$	521,887

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

REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
(Unaudited)

		2002			2001
REVENUE:
	Interest income	$	523		$	1,310
OPERATING EXPENSES:
	Interest (Note 3)		298,539			413,151
	Management fees — general partner (Note 4)		119,499			125,045
	General and administrative (Note 4)		26,677			21,672
	Legal and accounting		110,893			27,469
			555,608			587,337
LOSS FROM OPERATIONS			(555,085	)		(586,027	)
GAIN ON SALES OF LIMITED PARTNERSHIP INTEREST (Note 2)			8,372,815			—
DISTRIBUTIONS FROM LIMITED PARTNERSHIP RECOGNIZED AS INCOME (Note 2)			—			—
EQUITY IN INCOME OF LIMITED PARTNERSHIPS AND AMORTIZATION OF ADDITIONAL BASIS AND ACQUISITION COSTS (Note 2)			—			3,000
NET INCOME (LOSS)		$	7,817,730		$	(583,027	)
NET INCOME (LOSS) PER LIMITED PARTNERSHIP INTEREST		$	372		$	(28	)

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

2

REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

STATEMENT OF PARTNERS’ DEFICIENCY

FOR THE THREE MONTHS ENDED MARCH 31, 2002
(Unaudited)

		General			Limited
		Partners			Partners			Total
PARTNERSHIP INTERESTS						20,802
DEFICIENCY
	January 1, 2002	$	(694,705	)	$	(36,462,764	)	$	(37,157,469	)
	Net income for the three months ended March 31, 2002		78,177			7,739,553			7,817,730
DEFICIENCY
	March 31, 2002	$	(616,528	)	$	(28,723,211	)	$	(29,339,739	)

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

3

REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
(Unaudited)

					2002			2001
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net Income (loss)				$	7,817,730		$	(583,027	)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Gain on sale and foreclosure of limited partnership interests				(8,372,815	)		—
		Equity in income of limited partnerships and amortization of additional basis and acquisition costs				—			(3,000	)
			(Decrease) increase in accrued interest payable			(3,453,010	)		375,651
			Decrease in notes payable			(2,240,000	)		—
			(Decrease) increase in accrued fees and expenses due general partner			(3,560,482	)		136,064
			Increase (decrease) in accounts payable			36,757			(5,676	)
				Net cash used in operating activities		(9,771,820	)		(79,988	)
CASH FLOWS FROM INVESTING ACTIVITIES:
	Proceeds from sale of limited partnership interests					10,065,931			—
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS						294,111			(79,988	)
CASH, beginning of period						227,776			205,538
CASH, end of period					$	521,887		$	125,550
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
	Cash paid during the period for interest				$	3,751,549		$	37,500

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

4

REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2002

NOTE 1 — 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 financial statements; accordingly, the financial statements included herein should be reviewed in conjunction with the financial statements and related notes thereto contained in the Annual Report for the year ended December 31, 2001 prepared by Real Estate Associates Limited VII (the “Partnership.”). Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end. The results of operations for the interim periods 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 of the Partnership at March 31, 2002, and the results of operations and changes in cash flows for the three months then ended.

The general partners have a 1 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. National Partnership Investments Corp. (NAPICO) is the managing general partner of the Partnership. 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 NAPICO.

Basis of Presentation

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

Recent Accounting Pronouncements

In July 2001, Statement of Financial Accounting Standards Number (SFAS No.) 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets” were issued. SFAS No. 141 was effective immediately and SFAS 142 was effective January 2002. In June 2001, SFAS No. 143, “Accounting for Asset Retirement Obligations” was issued. In August 2001, SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” was issued. The new standards are not expected to have a significant impact on the Partnership’s financial statements.

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REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

NOTES TO FINANCIAL STATEMENTS (Continued)

MARCH 31, 2002

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Uses of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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 were 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 Income (Loss) Per Limited Partnership Interest

Net income (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 20,802 for the periods presented.

Cash

The Partnership has its cash on deposit primarily with two high credit quality financial institutions. Such cash is in excess of the FDIC insurance limit.

Income Taxes

No provision has been made for income taxes in the accompanying financial statements since such taxes, if any, are the liability of the individual partners.

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.

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REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

NOTES TO FINANCIAL STATEMENTS (Continued)

MARCH 31, 2002

NOTE 2 — INVESTMENTS IN LIMITED PARTNERSHIPS

As of March 31, 2002, the Partnership holds limited partnership interests in 16 limited partnerships. In addition, the Partnership holds a general partner interest in Real Estate Associates IV (“REA IV”), which in turn, holds limited partner interest in 13 additional limited partnerships. NAPICO is also a general partner in REA IV. In total, therefore the Partnership holds interests, either directly or indirectly through REAL VII, in 29 limited partnerships which own residential low income rental projects consisting of 2,513 apartment units. The mortgage loans of these projects are payable to or insured by various governmental agencies.

The Partnership, as a limited partner, is entitled to between 98 percent and 99 percent of the profits and losses in the limited partnerships it has invested in directly. The Partnership is also entitled to 99 percent of the profits and losses of REA IV. REA IV holds a 99 percent interest in each of the limited partnerships 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. The cumulative amount of the unrecognized equity in losses of certain limited partnerships was in the aggregate approximately $12,161,000 as of March 31, 2002.

Distributions from the limited partnerships are accounted for as a return of capital until the investment balance is reduced to zero. Subsequent distributions received are recognized as income.

The Partnership has no carrying value in investments in limited partnerships as of March 31, 2002.

The following are unaudited combined estimated statements of operations for the three months ended March 31, 2002 and 2001 for the limited partnerships in which the Partnership has investments:

			Three months			Three months
			ended			ended
			March 31, 2002			March 31, 2001
Revenues:
	Rental and other		$	3,955,000		$	5,019,000
Expenses:
	Depreciation			804,000			800,000
	Interest			272,000			486,000
	Operating			3,228,000			3,887,000
				4,304,000			5,173,000
		Net loss	$	(349,000	)	$	(154,000	)

7

REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

NOTES TO FINANCIAL STATEMENTS (Continued)

MARCH 31, 2002

NOTE 2 — INVESTMENTS IN LIMITED PARTNERSHIPS (Continued)

NAPICO, or one of its affiliates, is the general partner and property management agent for certain of the limited partnerships included above.

In February 2002, the Partnership sold its interests in the Goodlette Arms limited partnership and realized a gain of $8,372,816. The gain is equal to the net proceeds received because the Partnership had no investment related to this limited partnership.

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 was generally 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 — NOTES PAYABLE

Certain of the Partnership’s investments involved purchases of partnership interests from partners who subsequently withdrew from the operating partnership. As of March 31, 2002 and December 31, 2001, the Partnership is obligated on non-recourse notes payable of $11,374,501, bearing interest at 9.5 to 10 percent, to the sellers of the partnership interests. These obligations and related interest are collateralized by the Partnership’s investments in the investee limited partnerships and are payable only out of cash distributions from the investee partnerships, as defined in the notes. Unpaid interest

8

REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

NOTES TO FINANCIAL STATEMENTS (Continued)

MARCH 31, 2002

NOTE 3 — NOTES PAYABLE (Continued)

is due at maturity of the notes. All notes and related accrued interest payable, aggregating $29,107,458 as of March 31, 2002, became payable prior to March 31, 2002.

Due to the Partnership’s lack of cash and partners’ deficiency, there is substantial doubt about its ability to make these payments, which would result in the possible foreclosure of the investments in the local limited partnerships. As a result, there is substantial doubt about the Partnership’s ability to continue as a going concern.

In connection with the sale of the partnership interest in Goodlette Arms in 2002 (See Note 2), the Partnership paid off notes and related accrued interest payable aggregating approximately $6,000,000.

Management is in process of attempting to negotiate extensions of the maturity dates on the other past due notes payable.

NOTE 4 — ACCRUED FEES AND EXPENSES DUE 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 equal to .5 percent of the invested assets of the partnerships. Invested assets is 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 partnerships. The fee was approximately $120,000 and $125,000 for the three months ended March 31, 2002 and 2001, respectively.

The Partnership reimburses NAPICO for certain expenses. The reimbursement to NAPICO was approximately $11,000 for the three months ended March 31, 2002 and 2001, and is included in administrative expenses.

As of March 31, 2002, the fees and expenses due the managing general partner exceeded the Partnership’s cash. The managing general partner, during the forthcoming year, will not demand payment of amounts due in excess of such cash or such that the Partnership would not have sufficient operating cash; however, the Partnership will remain liable for all such amounts.

NOTE 5 — CONTINGENCIES

On August 27, 1998, two investors holding an aggregate of eight units of limited partnership interests in Real Estate Associates Limited III (an affiliated partnership in which NAPICO is the managing general partner) 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

9

REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

NOTES TO FINANCIAL STATEMENTS (Continued)

MARCH 31, 2002

NOTE 5 — CONTINGENCIES (Continued)

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 July 16, 2002. The managing general partner of such NAPICO managed partnerships and the other defendants believe that the plaintiffs’ claims are without merit and intend to contest the actions vigorously.

The managing general partner of the Partnership is a plaintiff in various lawsuits and has also been named a defendant in other lawsuits arising from transactions in the ordinary course of business. In the opinion of management and the corporate general partner, the claims will not result in any material liability to the Partnership.

NOTE 6 — 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, when it is practicable to estimate that value. The notes payable are collateralized by the Partnership’s investments in investee limited partnerships and are payable only out of cash distributions from investee partnerships. The operations generated by the investee limited partnerships, which account for the Partnership’s primary source of revenues, are subject to various government rules, regulations and restrictions which make it impracticable to estimate the fair value of the notes and related accrued interest payable. It is impracticable to estimate the fair value of the amounts due to the general partner due to their related party nature The carrying amount of other assets and liabilities reported on the balance sheets that require such disclosure approximates fair value due to their short-term maturity.

10

REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

MARCH 31, 2002

ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 certificates of deposit and other 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 .5 percent of invested 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 account is reduced to zero are not recognized.

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.

Except for certificates of deposit and money market funds, the Partnership’s investments are entirely interests in other limited and general partnerships owning government assisted projects. Available cash is invested in money market funds and certificates of deposit which provide interest income as reflected in the statement of operations. These temporary investments can be easily 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 was generally 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

11

REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

MARCH 31, 2002

ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations (Continued)

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.

12

REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

MARCH 31, 2002

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 Real Estate Associates Limited III (an affiliated partnership in which NAPICO is the managing general partner) 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 July 16, 2002. The managing general partner of such NAPICO managed partnerships and the other defendants believe that the plaintiffs’ claims are without merit and intend to contest the actions vigorously.

The holder of a Partnership note payable in the amount of $1,675,000 plus accrued interest payable of $2,524,730 as of March 31, 2002, seeks to compel the Partnership to execute a UCC-1 financing statement to perfect plaintiff’s security interest in the Partnership’s interest in the Henrico limited partnership. The Partnership has no investment balance related to this limited partnership.

The Partnership’s managing general partner is involved in various lawsuits. None of these are related to REAL VII.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

(a)     No exhibits are required per the provision of Item 6 of regulation S-B and no reports on Form 8-K were filed during the quarter ended March 31, 2002.

13

REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)

MARCH 31, 2002

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 VII (a California limited partnership)
By:	National Partnership Investments Corp., General Partner
By:	/s/  Peter Kompaniez Peter Kompaniez President
Date:	May 15, 2002
By:	/s/  Brian H. Shuman Brian H. Shuman Chief Financial Officer
Date:	May 15, 2002

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