Bank Repossession in Tenerife

This article describes the actions that a bank will take when they repossess your property, but it is best to try to negotiate with your bank first.  Even during the course of this process, you may be able to reach an out of court settlement with your bank such as a dacion en pago, which creates a clean break with your outstanding debt. 

Bank repossessions in Tenerife are rising, as they are in the rest of Spain and beyond.  The British and Irish expatriate community of Tenerife are particularly vulnerable to the combination of factors caused by this recession, and as more expats lose their jobs in Tenerife bank repossessions are on the rise. 

There are 6 stages when banks repossess property in Tenerife:

1. Getting into arrears
If you fall behind on your monthly mortgage repayments the bank will add extra interest to the arrears known as interés de demora.  The bank will try to contact you and may renegotiate terms in order to ease the burden.

2. The technical fault
90 days as from your first missed payment, your file is passed on to the bank’s debt collection department.  When there is a technical fault, it is registered with the Bank of Spain and it affects the bank’s liquidity ratio, which they will want to avoid because this contributes to their share value.  This is why it is best to negotiate an agreement before the technical fault.  Nevertheless, the debt collection department will make a last effort to recover the debt.

3. Notification of repossession
If the debt collection department decide that the chances of recovering the debt are too low, then about two weeks to a month later, you will be officially informed by a Notary of the proceedings going to court.  The requerimiento notarial is generally sent through a registered burofax. 

4. The repossession order
This happens before a judge, when the value of the property may be re-appraised and the judge decides the date for public auction. 

5. The Auction
The auction might be six months or a year after the technical fault, and if no one bids for the property then the bank will take it for 50% of the property value.  If sale amount is not high enough to pay all the outstanding debt, then you (and your guarantors) will continue to be liable to pay the remaining balance.  You will also be liable for the transfer tax (see the Tenerife Lifeline book for the amounts) of the property to the new owner as well as legal costs etc

6. Eviction
The property registered in the name of the new owner, and if you are still occupying your property in Tenerife, then the eviction process will begin.  The procedure takes about six months, after which the police will show up at your door with a locksmith.  If there are tenants in the property, then this process can be a very much longer and convoluted one.  If there are children in the property then eviction can be close to impossible.