Simply put, escrow is a legal arrangement whereby an asset (most commonly money, but sometimes
property such as a deed of title or website) is held by a third party (an escrow agent) in
trust pending a contingency or the fulfillment of a contract (such as payment of a purchase price).
Once the fulfillment event occurs the escrow agent then delivers the asset to the proper recipient.
Escrow is most commonly known in the United States and is often used in real estate transactions.
One of the biggest developments in the world of escrow is source code escrow, commonly known as
software escrow.
A software escrow agent is someone that takes hold of source code
of software in escrow, just as the traditional escrow organization hold cash or property.
Software escrow is typically requested by the party licensing software (the licensee),
to ensure proper maintenance of the software. The software source code is released to the licensee
if the licensor files for bankruptcy or otherwise fails to maintain and update the software as
promised in the software license agreement.
Either the licensor or licensee should pick a software escrow agent. In most cases it is
the licensor that selects and pays for the agent so that the owner of the software has the choice
of which third party will be responsible for storing and handling the source code.
Software escrow is becoming increasingly common. Chances are that if you are working in
the development field, then sooner or later software escrow is something you’ll need to
become acquainted with.
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