The 30-second video shows a bulldozer knocking down a house belonging to John Brooks, from Somerset in the UK.
His home was one of four foreign-owned houses slated for demolition in the village of Cantoria in Spain's southern Andalusia region.
To date, his is the only property to be razed but the other three homeowners could now be facing a similar fate.
Millions of houses were built during Spain's building boom but many did not have the property planning permission as developers and promoters sought to cash in quickly.
There are an estimated 300,000 illegal properties in Andalucia according to government estimates.
The consequences for homeowners have ranged from fines to difficulties in arranging connection to services or even court proceedings.
The demolition of the Cantoria properties comes after legal proceedings launched by Andalusia's government in 2004 against a local developer who illegally built the four houses, the homeowner support group AUAN said in a media release.
A demolition order was handed down in June and the promoter was ordered to knock down the properties at his own expense.
He was also ordered to compensate the four British home owners, who had acted in good faith, the court said.
But AUAN president Maura Hillen told The Local that — as far as they were aware — the affected homeowners had yet to receive any compensation.
The four houses have been vacant for some time, with services cut off some time ago.
"I'm just glad the owner wasn't there to see his house demolished," Hillen told the Local.
"Spain's complicated planning laws are a shambolic mess," said the property rights campaigner. "Unfortunately, it's the homeowners who purchased in good faith are the ones facing the real consequences."