UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION

                         WASHINGTON, DC
                              20549





                            FORM 8-K



                         CURRENT REPORT

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

                Date of Report: September 3, 1996


               CONSOLIDATED CAPITAL PROPERTIES III
     (Exact name of registrant as specified in its charter)


          CALIFORNIA              0-10273         94-2653686
(State or other jurisdiction of  (Commission   (I.R.S. Employer
incorporation or organization)   File Number)   Identification
                                                   Number)

                  One Insignia Financial Plaza
                      Post Office Box 1089
                Greenville, South Carolina  29602
             (Address of Principal Executive Office)


Registrant's telephone number, including area code (864) 239-1000


Item 2.  Acquisition or Disposition of Assets

On September  3,  1996,  State  Street  Bank  and  Trust  Company,  the  lender,
foreclosed on Mountain  Plaza Apartments located  in El Paso,  New Mexico.   The
mortgage note payable had been in  default since May 13,  1996.  In the  General
Partner's opinion, it was not in the Partnership's best interest to contest  the
foreclosure action.


Item 7.  Financial Statements and Exhibits

(c)     Exhibits:




EXHIBIT NO.              DESCRIPTION


   99.1                  Substitute Trustee's Deed entered into as of  September
                         3, 1996 by and between Mountain Plaza Associates, Ltd.,
                         a Texas limited partnership, and State Street Bank  and
                         Trust Company.



                           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.




                         CONSOLIDATED CAPITAL PROPERTIES III


                         By:  CONCAP EQUITIES, INC.
                              General Partner



                         By:  /s/ Carroll D. Vinson
                              Carroll D. Vinson
                              President


                         By:  /s/ Robert D. Long, Jr.
                              Robert D. Long, Jr.
                              Vice President/CAO


                         Date: September 18, 1996