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 (date of earliest event reported)  August 16, 1996

                    BALCOR REALTY INVESTORS 85 - SERIES II
                       A REAL ESTATE LIMITED PARTNERSHIP
         ------------------------------------------------------------
                           Exact Name of Registrant


Illinois                                0-14351
- --------------------------------        --------------------------------
State or other jurisdiction             Commission file number

2355 Waukegan Road
Suite A200
Bannockburn, Illinois                   36-3327917
- --------------------------------        --------------------------------
Address of principal                    I.R.S. Employer
executive offices                       Identification
                                        Number

60015
- --------------------------------
Zip Code


              Registrant's telephone number, including area code:
                                (847) 267-1600
<PAGE>
ITEM 2.  ACQUISITION OR DISPOSITION OF ASSETS
- ----------------------------------------------------------------------

Chestnut Ridge Apartments, Phase I

In 1982,  the Partnership  acquired Chestnut  Ridge Apartments,  Phase I,  Fort
Worth, Texas  (formerly known  as Cottonwood  Apartments, Phase  I),  utilizing
approximately $3,509,000  in  offering proceeds.    The property  was  acquired
subject to first mortgage financing of $5,850,000. An affiliate of the  General
Partner (the "Affiliate") purchased the first mortgage loan in 1987.  In  1990,
the Partnership obtained  a second  mortgage loan  from the  Affiliate to  fund
operating deficits at  the property.  In 1992,  the first  and second  mortgage
loans, which had a total  outstanding balance of $6,586,700, including  accrued
interest, were refinanced  with a  new $3,053,400  first mortgage  loan from  a
third party and a $698,044 second mortgage loan and a $2,835,255 unsecured loan
(together, the "Affiliate Loan") from an affiliate of the General Partner.   In
1994, the  first mortgage  loan  was refinanced  with  a new  $3,694,000  first
mortgage loan from a third party.  Excess refinancing proceeds of $214,084 were
used to repay a portion of the Affiliate Loan.  In addition, $1,646,000 of the 
balance of the Affiliate Loan was repaid with funds borrowed from  the General 
Partner  and the remainder was retired and replaced  with a subordinate 
nonrecourse loan  of $1,473,215 and a preferred limited partnership interest 
of $200,000, both  held by an affiliate of the General Partner.  

On September 6,  1996, the Partnership  contracted to sell  the property for  a
sale price  of $5,521,500  to an  unaffiliated party,  TGM Realty  Corp. #5,  a
Delaware corporation.   The  purchaser has  deposited $150,000  into an  escrow
account as earnest money.  The remainder  of the sale price will be payable  in
cash at closing, scheduled for  September 30, 1996.   From the proceeds of  the
sale, the Partnership will  pay the outstanding balance  of the first  mortgage
loan which is expected to be approximately $3,629,000 at closing, a  prepayment
penalty of $129,729 and  $110,430 to a third  party as a brokerage  commission.
An affiliate of the third party providing property management services for  the
property will receive a fee of $55,215 for services rendered in connection with
the sale of the property.  The Partnership will receive the remaining  proceeds
of approximately  $1,601,000,  less  closing  costs.   Of  the  remaining  sale
proceeds, $250,000  will  be  retained  by the  Partnership  and  will  not  be
available for  use or  distribution  by the  Partnership  until 90  days  after
closing.   Neither  the  General  Partner nor  any  affiliate  will  receive  a
brokerage commission in connection with the  sale of the property. The  General
Partner will be reimbursed by the Partnership for its actual expenses  incurred
in connection with the  sale.    The subordinate nonrecourse loan  and preferred
limited partnership interest will not be repaid and will be written off.

An affiliate  of the  General  Partner has  simultaneously contracted  to  sell
Chestnut Ridge  Apartments, Phase  II,  located adjacent  to  Phase I,  to  the
purchaser.  In the event that the agreement of sale for Phase I or Phase II is
terminated for any reason, the agreement of sale for the other phase will  also
be terminated.   In  addition, other  affiliates of  the General  Partner  have
recently sold or contracted to sell 9 other properties to the purchaser.    
<PAGE>
The closing is subject  to the satisfaction of  numerous terms and  conditions,
including the sale  of Phase II.   There can  be no assurance  that all of  the
terms and conditions will be complied  with and, therefore, it is possible  the
sale of the property may not occur.


ITEM 5.  OTHER EVENTS
- ---------------------------------------------------------------------

a)  Marbrisa Apartments

As previously reported, the joint venture consisting of the Partnership and  an
affiliate  which  owns  Marbrisa  Apartments,  Hillsborough  County,   Florida,
contracted to sell the property on July 15, 1996 to an unaffiliated party,  ERP
Operating Limited  Partnership, an  Illinois limited  partnership, for  a  sale
price of $8,100,000.   Pursuant  to the agreement  of sale,  the purchaser  has
deposited an additional $200,000 in earnest money for a total of $500,000.   As
of August 16, 1996, the  joint venture and the  purchaser agreed to reduce  the
sale price to $7,800,000. The closing date  of the sale has also been  extended
from August 30, 1996 to September 20, 1996.

c)  Willow Bend Lake Apartments

As previously reported, on  June 28, 1996, the  Partnership contracted to  sell
Willow Bend Lake Apartments,  East Baton Rouge,  Louisiana, to an  unaffiliated
party, BH TFL, Inc., for a sale price of $14,853,000.  On August 16, 1996,  the
purchaser exercised its option to terminate the agreement of sale.

d)  Steeplechase Apartments

As previously reported, on  July 15, 1996, the  Partnership contracted to  sell
Steeplechase Apartments, Lexington-Fayette, Kentucky, to an unaffiliated party,
ERP Operating Limited Partnership, an Illinois limited partnership, for a  sale
price of $11,500,000.  On August  20, 1996, the purchaser exercised its  option
to terminate the agreement  of sale.   Pursuant to the  agreement of sale,  the
earnest money  previously  deposited  and  interest  accrued  thereon  will  be
returned to the purchaser.  

e)  Hunter's Glen Apartments

As previously reported, on  June 30, 1996, the  Partnership contracted to  sell
Hunter's Glen Apartments, St. Louis County, Missouri, to ERP Operating  Limited
Partnership, an Illinois limited partnership,  for a sale price of  $9,100,000.
On August 22,  1996, the  Partnership and the  purchaser agreed  to extend  the
closing date from August 30, 1996 to September 30, 1996.

f)  Country Oaks Apartments

As previously reported, on  June 25, 1996, the  Partnership contracted to  sell
Country Oaks  Apartments, Memphis,  Tennessee, to  SCA North  Carolina  Limited
Partnership, a Delaware limited  partnership, for a  sale price of  $8,250,000.
Pursuant to letter agreements  between the Partnership  and the purchaser,  the
closing was extended and the sale closed on September 5, 1996.  SCA North
<PAGE>
Carolina Limited  Partnership assigned  its  rights under  the contract  to  an
affiliate, SCA-Tennessee Limited Partnership, which took title to the  property
subject to  the existing  first  mortgage loan.  The  loan had  an  outstanding
principal balance of $5,946,892 at closing.  From the proceeds of the sale, the
Partnership paid $123,750  as a  brokerage commission  to an  affiliate of  the
third party providing property management services for the property and $30,686
in  closing  costs.    The  Partnership  received  the  remaining  proceeds  of
approximately $2,149,000.


ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS
- ----------------------------------------------------------------------

     (A)  FINANCIAL STATEMENTS AND EXHIBITS:

            None

     (B)  PRO FORMA FINANCIAL INFORMATION:

            None

     (C)  EXHIBITS:

          (2)  Agreement of Sale dated September 3, 1996 relating to the sale 
               of Chestnut Ridge Apartments, Phase I, Fort Worth, Texas.

          (99) (a)  (i)  First Amendment to Agreement of Sale dated August 16, 
                         1996 relating to the sale of Marbrisa Apartments, 
                         Hillsborough County, Florida.

                    (ii) Letter Agreement dated August 20, 1996 relating to the
                         sale of Marbrisa  Apartments, Hillsborough County, 
                         Florida.

               (b)  Letter Agreement dated August 16, 1996 relating to the sale
                    of Willow Bend Lake Apartments, East Baton Rouge, 
                    Louisiana.

               (c)  Notice of Disapproval dated August 20, 1996 relating to the
                    sale of Steeplechase Apartments, Lexington, Kentucky.

               (d)  Letter Agreement dated August 22, 1996 relating to the 
                    sale of Hunter's Glen Apartments, St. Louis County, 
                    Missouri.

               (e)  Letter Agreements dated August 7, 1996, August 23, 1996 and
                    August 27, 1996  relating to the sale of Country Oaks
                    Apartments, Memphis, Tennessee. 
           
          No information is required  under Items 1,  3, 4, 6  and 8 and  these
items have, therefore, been omitted.
<PAGE>
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.


                    BALCOR REALTY INVESTORS 85 -SERIES II
                    A REAL ESTATE LIMITED PARTNERSHIP

                         By:  Balcor Partners-XVII, an Illinois
                              general partnership, its general partner

                         By:  The Balcor Company, a Delaware corporation,
                              a partner

                         By:  /s/  Jerry M. Ogle
                              ------------------------------------
                                   Jerry M. Ogle, Vice President 
                                   and Secretary

Dated:  September 20, 1996
<PAGE>
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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 (date of earliest event reported)  August 16, 1996

                    BALCOR REALTY INVESTORS 85 - SERIES II
                       A REAL ESTATE LIMITED PARTNERSHIP
         ------------------------------------------------------------
                           Exact Name of Registrant

Illinois                                0-14351
- --------------------------------        --------------------------------
State or other jurisdiction             Commission file number

2355 Waukegan Road
Suite A200
Bannockburn, Illinois                   36-3327917
- --------------------------------        --------------------------------
Address of principal                    I.R.S. Employer
executive offices                       Identification
                                        Number

60015
- --------------------------------
Zip Code

              Registrant's telephone number, including area code:
                                (847) 267-1600
ITEM 2.  ACQUISITION OR DISPOSITION OF ASSETS
- ----------------------------------------------------------------------

Chestnut Ridge Apartments, Phase I

In 1982,  the Partnership  acquired Chestnut  Ridge Apartments,  Phase I,  Fort
Worth, Texas  (formerly known  as Cottonwood  Apartments, Phase  I),  utilizing
approximately $3,509,000  in  offering proceeds.    The property  was  acquired
subject to first mortgage financing of $5,850,000. An affiliate of the  General
Partner (the "Affiliate") purchased the first mortgage loan in 1987.  In  1990,
the Partnership obtained  a second  mortgage loan  from the  Affiliate to  fund
operating deficits at  the property.  In 1992,  the first  and second  mortgage
loans, which had a total  outstanding balance of $6,586,700, including  accrued
interest, were refinanced  with a  new $3,053,400  first mortgage  loan from  a
third party and a $698,044 second mortgage loan and a $2,835,255 unsecured loan
(together, the "Affiliate Loan") from an affiliate of the General Partner.   In
1994, the  first mortgage  loan  was refinanced  with  a new  $3,694,000  first
mortgage loan from a third party.  Excess refinancing proceeds of $214,084 were
used to repay a portion of the Affiliate Loan.  In addition, $1,646,000 of the 
balance of the Affiliate Loan was repaid with funds borrowed from  the General 
Partner  and the remainder was retired and replaced  with a subordinate 
nonrecourse loan  of $1,473,215 and a preferred limited partnership interest 
of $200,000, both  held by an affiliate of the General Partner.  

On September 6,  1996, the Partnership  contracted to sell  the property for  a
sale price  of $5,521,500  to an  unaffiliated party,  TGM Realty  Corp. #5,  a
Delaware corporation.   The  purchaser has  deposited $150,000  into an  escrow
account as earnest money.  The remainder  of the sale price will be payable  in
cash at closing, scheduled for  September 30, 1996.   From the proceeds of  the
sale, the Partnership will  pay the outstanding balance  of the first  mortgage
loan which is expected to be approximately $3,629,000 at closing, a  prepayment
penalty of $129,729 and  $110,430 to a third  party as a brokerage  commission.
An affiliate of the third party providing property management services for  the
property will receive a fee of $55,215 for services rendered in connection with
the sale of the property.  The Partnership will receive the remaining  proceeds
of approximately  $1,601,000,  less  closing  costs.   Of  the  remaining  sale
proceeds, $250,000  will  be  retained  by the  Partnership  and  will  not  be
available for  use or  distribution  by the  Partnership  until 90  days  after
closing.   Neither  the  General  Partner nor  any  affiliate  will  receive  a
brokerage commission in connection with the  sale of the property. The  General
Partner will be reimbursed by the Partnership for its actual expenses  incurred
in connection with the  sale.    The subordinate nonrecourse loan  and preferred
limited partnership interest will not be repaid and will be written off.

An affiliate  of the  General  Partner has  simultaneously contracted  to  sell
Chestnut Ridge  Apartments, Phase  II,  located adjacent  to  Phase I,  to  the
purchaser.  In the event that the agreement of sale for Phase I or Phase II is
terminated for any reason, the agreement of sale for the other phase will  also
be terminated.   In  addition, other  affiliates of  the General  Partner  have
recently sold or contracted to sell 9 other properties to the purchaser.
The closing is subject  to the satisfaction of  numerous terms and  conditions,
including the sale  of Phase II.   There can  be no assurance  that all of  the
terms and conditions will be complied  with and, therefore, it is possible  the
sale of the property may not occur.

ITEM 5.  OTHER EVENTS
- ---------------------------------------------------------------------

a)  Marbrisa Apartments

As previously reported, the joint venture consisting of the Partnership and  an
affiliate  which  owns  Marbrisa  Apartments,  Hillsborough  County,   Florida,
contracted to sell the property on July 15, 1996 to an unaffiliated party,  ERP
Operating Limited  Partnership, an  Illinois limited  partnership, for  a  sale
price of $8,100,000.   Pursuant  to the agreement  of sale,  the purchaser  has
deposited an additional $200,000 in earnest money for a total of $500,000.   As
of August 16, 1996, the  joint venture and the  purchaser agreed to reduce  the
sale price to $7,800,000. The closing date  of the sale has also been  extended
from August 30, 1996 to September 20, 1996.

c)  Willow Bend Lake Apartments

As previously reported, on  June 28, 1996, the  Partnership contracted to  sell
Willow Bend Lake Apartments,  East Baton Rouge,  Louisiana, to an  unaffiliated
party, BH TFL, Inc., for a sale price of $14,853,000.  On August 16, 1996,  the
purchaser exercised its option to terminate the agreement of sale.

d)  Steeplechase Apartments

As previously reported, on  July 15, 1996, the  Partnership contracted to  sell
Steeplechase Apartments, Lexington-Fayette, Kentucky, to an unaffiliated party,
ERP Operating Limited Partnership, an Illinois limited partnership, for a  sale
price of $11,500,000.  On August  20, 1996, the purchaser exercised its  option
to terminate the agreement  of sale.   Pursuant to the  agreement of sale,  the
earnest money  previously  deposited  and  interest  accrued  thereon  will  be
returned to the purchaser.  

e)  Hunter's Glen Apartments

As previously reported, on  June 30, 1996, the  Partnership contracted to  sell
Hunter's Glen Apartments, St. Louis County, Missouri, to ERP Operating  Limited
Partnership, an Illinois limited partnership,  for a sale price of  $9,100,000.
On August 22,  1996, the  Partnership and the  purchaser agreed  to extend  the
closing date from August 30, 1996 to September 30, 1996.

f)  Country Oaks Apartments

As previously reported, on  June 25, 1996, the  Partnership contracted to  sell
Country Oaks  Apartments, Memphis,  Tennessee, to  SCA North  Carolina  Limited
Partnership, a Delaware limited  partnership, for a  sale price of  $8,250,000.
Pursuant to letter agreements  between the Partnership  and the purchaser,  the
closing was extended and the sale closed on September 5, 1996.  SCA North
Carolina Limited  Partnership assigned  its  rights under  the contract  to  an
affiliate, SCA-Tennessee Limited Partnership, which took title to the  property
subject to  the existing  first  mortgage loan.  The  loan had  an  outstanding
principal balance of $5,946,892 at closing.  From the proceeds of the sale, the
Partnership paid $123,750  as a  brokerage commission  to an  affiliate of  the
third party providing property management services for the property and $30,686
in  closing  costs.    The  Partnership  received  the  remaining  proceeds  of
approximately $2,149,000.

ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS
- ----------------------------------------------------------------------

     (A)  FINANCIAL STATEMENTS AND EXHIBITS:

            None

     (B)  PRO FORMA FINANCIAL INFORMATION:

            None

     (C)  EXHIBITS:

          (2)  Agreement of Sale dated September 3, 1996 relating to the sale 
               of Chestnut Ridge Apartments, Phase I, Fort Worth, Texas.

          (99) (a)  (i)  First Amendment to Agreement of Sale dated August 16, 
                         1996 relating to the sale of Marbrisa Apartments, 
                         Hillsborough County, Florida.

                    (ii) Letter Agreement dated August 20, 1996 relating to the
                         sale of Marbrisa  Apartments, Hillsborough County, 
                         Florida.

               (b)  Letter Agreement dated August 16, 1996 relating to the sale
                    of Willow Bend Lake Apartments, East Baton Rouge, 
                    Louisiana.

               (c)  Notice of Disapproval dated August 20, 1996 relating to the
                    sale of Steeplechase Apartments, Lexington, Kentucky.

               (d)  Letter Agreement dated August 22, 1996 relating to the 
                    sale of Hunter's Glen Apartments, St. Louis County, 
                    Missouri.

               (e)  Letter Agreements dated August 7, 1996, August 23, 1996 and
                    August 27, 1996  relating to the sale of Country Oaks
                    Apartments, Memphis, Tennessee. 
           
          No information is required  under Items 1,  3, 4, 6  and 8 and  these
items have, therefore, been omitted.
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.

                    BALCOR REALTY INVESTORS 85 -SERIES II
                    A REAL ESTATE LIMITED PARTNERSHIP

                         By:  Balcor Partners-XVII, an Illinois
                              general partnership, its general partner

                         By:  The Balcor Company, a Delaware corporation,
                              a partner

                         By:  /s/  Jerry M. Ogle
                              ------------------------------------
                                   Jerry M. Ogle, Vice President 
                                   and Secretary

Dated:  September 20, 1996