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




                                    FORM 8-K


                                 CURRENT REPORT


                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

       Date of Report (Date of earliest event reported) August 30, 2005

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


       California                0-14187                94-2940208
State or other jurisdiction    (Commission           (I.R.S. Employer
   of incorporation)           File Number)       Identification Number)

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


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

Check  the  appropriate  box  below  if the  Form  8-K  filing  is  intended  to
simultaneously satisfy the filing obligations of the registrant under any of the
following provisions:

[ ]   Written  communications  pursuant to Rule 425 under the  Securities  Act
      (17 CFR 230.425)

[ ]   Soliciting  material  pursuant to Rule 14a-12 under the Exchange Act (17
      CFR 240.14a-12)

[ ]   Pre-commencement  communications  pursuant  to Rule  14d-2(b)  under the
      Exchange Act (17 CFR 240.14d-2(b))

[ ]   Pre-commencement  communications  pursuant  to Rule  13e-4(c)  under the
      Exchange Act (17 CFR 240.13e-4(c))









Item 2.03 Creation of a Direct  Financial  Obligation or an Obligation  Under an
Off-Balance Sheet Arrangement of a Registrant.

Consolidated Capital  Institutional  Properties/3 (the "Registrant")  obtained a
mortgage loan in the principal amount of $4,940,000 on its investment  property,
Park Capitol Apartments,  located in Salt Lake City, Utah. The existing mortgage
loan with an outstanding principal amount of approximately $2,975,000 was repaid
with  proceeds from the new mortgage  loan.  The new mortgage  requires  monthly
payments of principal  and interest  beginning on October 1, 2005 until the loan
matures  September 1, 2015,  with a fixed  interest  rate of 5.02% and a balloon
payment of approximately  $4,021,000 due at maturity.  The Registrant may prepay
the mortgage  without penalty within 90 days of the maturity date.  However,  if
the  Registrant  prepays the  mortgage  loan prior to June 2, 2015, a prepayment
penalty (as defined in the loan agreement) will apply.

In accordance with the terms of the loan agreement  relating to the new mortgage
financing, payment of the note may be accelerated at the option of the lender if
an event of default, as defined in the loan agreement, occurs. Events of default
include,  but are not limited to: failure to pay or deposit any amount due under
the loan  agreement  when  due;  failure  to make the final  payment  or pay the
prepayment  premium due under the note; and breach or default in the performance
of any of the covenants or agreements made by the Registrant.

The foregoing  description is qualified in its entirety to the Deed of Trust and
Promissory Note,  copies which will be filed with the  Registrant's  Form 10-QSB
for the quarterly period ended September 30, 2005.







                                    SIGNATURE


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



                                    CONSOLIDATED CAPITAL INSTITUTIONAL
                                    PROPERTIES/3

                                    By:   CONCAP EQUITIES, INC.
                                          General Partner


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


                                    Date: September 6, 2005