Outstanding mortgage debt

It is a common misconception amongst expatriates that handing over the keys for your property in Tenerife will settle the matter with the bank.  This is not the case unless a dacion en pago has been signed at a notary between borrower and bank.  

According to article 1911 of the Spanish Civil Code, when you sign a mortgage deed, that liability extends to all your assets, both now and in the future.  So if you hand your keys back to your mortgage lender, or your Tenerife Property is repossessed, the bank can continue to chase you for any outstanding money you owe.

So if the bank repossess your home, you may not have heard the end of it.  When that property is eventually sold at auction, it may easily fetch only 50% of its value.  The outstanding mortgage balance plus the enormous costs incurred will be a debt for which you are liable.

If you have assets abroad, such as a property, then it is becoming increasingly likely that banks will pursue these assets themselves or sell the debt to local debt collection agencies in your country.  

If you work in Tenerife, then the bank can apply through the courts for information from the Social Security Office which will allow them to apply to the courts to place an embargo on part of your salary.