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): February 1, 2002



                         Commission File Number: 0-18942

                           ILM II SENIOR LIVING, INC.
             -----------------------------------------------------
             (Exact name of registrant as specified in its charter)


        Virginia                                               06-1293758
- --------------------------                             -------------------------
 (State of organization)                                    (I.R.S. Employer
                                                           Identification No.)

1750 Tysons Boulevard, Suite 1200,
Tysons Corner, Virginia                                          22102
- ---------------------------------------                -------------------------
(Address of principal executive office)                        (Zip Code)


                  (888) 257-3550
- ----------------------------------------------------
(Registrant's telephone number, including area code)


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ITEM 5.  OTHER EVENTS

      As previously reported on November 16, 2001, ILM II Senior Living, Inc., a
Virginia finite-life corporation (the "Company") and its subsidiary ILM II
Holding, Inc., ("ILM II Holding") entered into a purchase and sale agreement
with BRE/Independent Living, LLC, a Delaware limited liability company ("BRE")
for the sale of the Company's senior and assisted living facilities and certain
related assets for $45.5 million (the "BRE Agreement").

      Also as previously reported, on January 15, 2002 the Company received a
letter from BRE indicating its intention not to consummate the BRE transaction
at the agreed upon contract price. The Company determined that such refusal to
consummate the BRE Agreement in accordance with its terms constituted a breach
by BRE of the BRE Agreement. Accordingly the Company terminated the BRE
Agreement.

      On February 1, 2002, BRE filed suit against the Company, its President and
Chief Executive Officer, ILM II Holding, and its President, in the Supreme Court
of the State of New York alleging various causes of action for breach of
contract, tortious interference with contractual relations and unjust
enrichment. BRE seeks compensatory and punitive damages in an amount in excess
of $10 million to be determined at trial. BRE alleges, among other things, that
the Company and ILM II Holding breached the no-solicitation provision of the BRE
Agreement, the President and Chief Executive Officer of the Company and the
President of ILM II Holding tortiously interfered with BRE's contractual
relations with the Company and ILM II Holding, and the Company and ILM II
Holding were unjustly enriched as a result of their alleged breach. The Company
believes these allegations are without merit and will vigorously defend this
action.

ITEM 7.  FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.

      (a)   Not Applicable

      (b)   Not Applicable

      (c)   Not Applicable


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                                   SIGNATURES

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.

                                    ILM II SENIOR LIVING, INC.



                                    By:/s/ J. William Sharman, Jr.
                                       -------------------------------------
                                       J. William Sharman, Jr.
                                       Chairman of the Board of Directors,
                                       President and Chief Executive Officer

Dated:  February 8, 2002


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