Summary: Third party escrow services protect digital assets like software, SaaS apps, and source code to ensure business continuity and reduce risk. Learn what third party escrow is, who’s involved, why it matters, and how to choose the right escrow agent.
- Third party escrow agents act as neutral intermediaries to protect mission-critical assets.
- Typical escrow parties include the depositor, beneficiary, and escrow agent.
- Escrow services mitigate legal and operational risks.
- Choosing the right agent requires assessing verification, security, compliance, and reliability.
- EscrowTech offers tailored software, source code, and SaaS escrow agreements.
Third-party escrow agents act as trusted mediators between two parties to protect intellectual property. That includes intangible but mission-critical assets such as software, SaaS applications, IP, and data. These individuals are key to helping businesses manage risk and ensure business continuity in the digital age.
In this blog, we’ll explore what a third-party escrow service is and why you need one to preserve your most valuable assets. Continue reading to learn how and why to select an escrow agent or escrow company.
What Is a Third-Party Escrow Service?
A third-party escrow service is a neutral, independent organization. Their role is to hold critical assets on behalf of two or more parties engaged in a contractual relationship. These assets may include software source code, data, or documents.
The escrow agent safeguards these assets and releases them only under agreed-upon conditions. Release conditions might include:
- The vendor going out of business
- The vendor discontinuing support for the product
- A party breaching a licensing agreement
Escrow services are especially vital in industries where software or proprietary technology is integral to business operations. By involving a third party escrow agent, all parties can operate with less risk.
Who Are the Parties in an Escrow Account?
There are typically three main parties involved in any third-party escrow arrangement:
- Depositor: Often the software developer, vendor, or technology provider. This party places the assets (like source code or IP) into escrow.
- Beneficiary: Usually the licensee or client. This party relies on those assets to run its operations.
- Third Party Escrow Company or Agent: An independent entity like EscrowTech. This party holds, verifies, and manages the release of the escrowed materials. They operate according to the terms of the escrow agreement.
What Is the Purpose of Escrow Services?
The primary purpose of third-party escrow services is to protect all stakeholders by mitigating risk. Such services are particularly important in regulated industries or high-stakes business relationships.
In essence, your third-party escrow agent ensures the beneficiary can maintain access to critical systems or data. The assets will be accessible, even if the vendor fails to deliver. This process reduces legal and operational risks for both parties. The escrow process offers a structured, neutral framework for asset transfer and release.
Escrow services strike a balance between security and accessibility. Ultimately, they help vendors demonstrate good faith by agreeing to safeguard assets while still retaining ownership.
How to Choose a Third-Party Escrow Agent
When choosing a third-party escrow company, reputation should always come first. Trusted names like EscrowTech offer a long track record of proven reliability. Plus, you’ll benefit from the organization’s deep, specific technological expertise.
Here are the other features to look for when choosing a third-party escrow service for your business:
- Access to technical verification services. Some escrow companies can confirm the completeness and usability of escrow deposits.
- A dedication to compliance. Ensure your third-party escrow agent is in compliance with ISO, SOC, or other security standards.
- A secure infrastructure. A reputable escrow agent should offer strong cybersecurity protections, such as encrypted storage. Ideally, look for redundant data centers and comprehensive chain-of-custody protocols.
- Streamlined release management. Ensure the agent has clear, documented procedures for handling release events.
Third-Party Escrow Services from EscrowTech
EscrowTech is uniquely equipped to handle intangible assets and IP, such as source code and software assets. They have over 25 years of experience and are trusted by half of all Fortune 500 companies. Because they have such deep expertise in the space, they offer the most flexible agreements in the industry. Each agreement can be tailored to your business and legal needs, including multi-beneficiary options.
EscrowTech’s most critical offerings are software escrow and source code escrow agreements.
Software Escrow Agreements
A software escrow agreement involves placing the compiled application, installation files, user documentation, and related assets into escrow. This ensures that the licensee will have access to the working version of the software. Operations can continue even if the developer fails to uphold their contractual obligations.
Software Escrow is ideal for those who depend on third-party software to power mission-critical systems. It provides assurance that operations can continue seamlessly, even in adverse situations.
SaaS Escrow Agreements
SaaS solutions are hosted by the vendor. That means access to the service is entirely dependent on the provider’s infrastructure. A SaaS escrow agreement is designed to protect users of cloud-based software applications.
With a SaaS escrow arrangement, EscrowTech ensures the application’s source code is protected. It also safeguards critical components such as:
- Cloud configuration files
- Databases
- Virtual machines
- Documentation
This allows the beneficiary to continue accessing the service in the event of vendor failure. Thus, SaaS escrow is ideal for businesses that rely heavily on hosted applications for core operations.
Protect Your Mission-Critical Assets with EscrowTech
EscrowTech is a leading third-party escrow company with a longstanding reputation for security. With flexible software and source code escrow agreements, EscrowTech ensures businesses can operate with confidence. We offer a range of escrow solutions tailored for intellectual property protection. We’re eager to help you build business relationships built on trust.