The 8 Essential Questions Every Software or SaaS Company Should Ask Before Choosing an Escrow Vendor

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If you’re delivering software or SaaS to enterprise clients, escrow is no longer just a “check-the-box” requirement—it’s a competitive advantage. Done right, it helps you protect your intellectual property, close more deals, reduce liability, and dramatically lower internal overhead.

But not all escrow vendors are built for modern software development.

This guide outlines the 8 essential questions every software vendor or SaaS company should ask before choosing an escrow provider. These questions help you ensure that your escrow solution is secure, automated, efficient, cost-effective, and legally sound.

Key Terms for Software Depositors

Term

Definition

Depositor

The software or SaaS provider placing IP into escrow.

Beneficiary

Your client who may receive escrow materials under contractually defined conditions.

Escrow Deposit

The source code, documentation, data, or deployment assets held by the escrow agent.

Automated Escrow™

PRAXIS’ integration that automatically pulls updates from GitHub, GitLab, Bitbucket, or Azure DevOps.

Infinite Retention

A policy that stores every version of escrow deposits forever—never deleted or overwritten.

Technical Verification

Testing that ensures escrow deposits are complete, buildable, and deployable.

SOC 2 Compliance

A data security standard for service providers, focused on confidentiality, integrity, and availability.

Section 365(n)

U.S. bankruptcy law ensuring your clients can continue using your software during bankruptcy.

E&O Insurance

Errors & Omissions insurance covers financial loss due to professional mistakes or negligence.

1. Do You Maintain SOC 2-Level Security to Protect Our IP?

Why it matters:
 Your escrow vendor will hold highly sensitive materials—your proprietary source code, keys, build tools, and possibly even client data. Their controls must align with enterprise-grade expectations.

Ask:

  • Are your systems aligned with SOC 2 Trust Services Criteria?
  • Are all deposits encrypted in transit and at rest?
  • Do you monitor and restrict access internally?

Security failures at your escrow vendor can expose you to customer loss, legal action, and reputational damage.

2. Do You Offer Automated Escrow from GitHub, GitLab, or Bitbucket?

Why it matters:
 Manually sending files to escrow via email or FTP is risky and resource-intensive. It puts pressure on your DevOps or engineering teams and increases the chance of out-of-date or incomplete deposits.

Automated Escrow™ advantages:

  • No manual uploading.
  • Compliance made easy! “Set it and forget it!”
  • No risk of human error or skipped deposits.
  • Lower cost and effort—fully integrated into your development process.

Reduce internal costs by up to 90% and ensure your escrow account is always accurate and current.

3. Do You Retain All Escrow Versions with Infinite Retention™?

Why it matters:
 Overwriting the latest version or deleting older deposits creates serious legal and technical risk. If the most recent version fails, you want access to a known working version.

Why Infinite Retention matters:

  • Every version is stored, forever.
  • No version is deleted or replaced—ever.
  • Restores can be made from any point in your release history.

Infinite Retention is standard at PRAXIS—because business continuity demands it.

4. Can You Verify That Deposits Are Complete and Functional?

Why it matters:
 If your escrow materials are released, they need to work. Your reputation (and legal risk) depends on it.

Technical Verification helps you:

  • Ensure completeness of your deposit.
  • Build and test your software from scratch.
  • Confirm dependencies, instructions, and configuration files are included.

Verified deposits close deals faster and eliminate disputes later.

5. Can You Escrow SaaS Data, API Keys, and Offer a Recovery Environment?

Why it matters:
 For SaaS applications, source code is just part of the picture. Customers may need user data, system configurations, and secure credentials to maintain operations in a failure event.

SaaS continuity escrow should include:

  • Databases or anonymized data replicas.
  • Credentials, tokens, and infrastructure templates.
  • A preconfigured Recovery Environment as a failover option.

Full-stack SaaS escrow helps you meet client continuity requirements without giving up control.

6. Are You a U.S.-Based Escrow Agent Familiar with Section 365(n)?

Why it matters:
 Escrow is not only technical—it’s legal. In the U.S., Section 365(n) of the Bankruptcy Code protects software licensees, allowing them to continue using licensed software even if the vendor files for bankruptcy.

Why U.S. jurisdiction is best:

  • 365(n) guarantees license continuation rights for your clients.
  • U.S. courts offer the most robust IP and licensing protections.
  • Global clients prefer U.S.-based agents for enforceability.

Your escrow agreement is only as enforceable as the jurisdiction behind it.

7. Do You Carry Errors & Omissions (E&O) Insurance—and How Are We Protected?

Why it matters:
 Mistakes happen. If your escrow agent loses, mishandles, or mis releases your IP—or simply fails to act—E&O insurance provides a financial safety net.

What to ask:

  • Do you carry dedicated E&O insurance?
  • What’s the coverage limit?
  • Is your escrow service fully covered?

PRAXIS maintains $2 million in E&O insurance, giving you and your customers added protection and peace of mind.

8. Are You a Neutral Third-Party Technology Escrow Specialist—Not a Law Firm or Bank?

Why it matters:
 Only a neutral, independent, professional technology escrow provider can meet the legal, technical, and business needs of both parties in an escrow agreement. Law firms and banks lack the technical capacity, neutrality, and tooling for modern software escrow.

Risks of law firms or banks:

  • Law firms may represent one party—creating a conflict of interest.
  • Banks treat escrow like a document repository—not a continuity mechanism.
  • Neither is equipped to interface with Git repositories or validate technical materials.

Why you want a specialist:

  • Neutrality ensures fair release decisions.
  • Technical infrastructure supports Git-based, cloud-native, and SaaS models.
  • Verified, secure handling of code, data, and credentials.

Choose a true escrow partner—not a file cabinet.

Final Checklist: The 8-Point Depositor’s Escrow Evaluation

Key Question

Why It Matters

✔️

Do they operate with SOC 2-aligned security controls?

Protect your IP and meet client security needs.

 

Do they support Automated Escrow™ from source control platforms?

Reduce cost and eliminate human error.

 

Do they retain all versions via Infinite Retention™?

Provide rollback protection and complete history.

 

Can they verify escrow contents function as expected?

Prevent disputes and ensure readiness at time of release.

 

Can they escrow data, credentials, and SaaS environments?

Meet full SaaS continuity expectations.

 

Are they U.S.-based and familiar with Section 365(n)?

Ensure legal enforceability under U.S. law.

 

Do they carry Errors & Omissions insurance?

Protect all parties from escrow-related risk.

 

Are they a neutral, professional technology escrow provider?

Guarantee impartiality and technical readiness.

 

About PRAXIS Technology Escrow

PRAXIS is a U.S.-based, independent escrow agent serving software and SaaS providers worldwide. Our solutions are designed to reduce legal risk, increase operational efficiency, and help vendors close deals faster.

We offer:

  • Automated Escrow™ from GitHub, GitLab, Bitbucket, and Azure DevOps
  • Infinite Retention for complete archival assurance
  • Technical Verification Services
  • SaaS Escrow & Recovery Environments™
  • $2 Million in E&O Coverage
  • Impartial, U.S.-Jurisdiction Agreements

Frequently Asked Questions

An escrow agreement is a contract among a depositor, a beneficiary, and an escrow agent. Typically, the escrow agent is asked to hold and dispose of certain deposit materials as part of a larger transaction between the depositor and beneficiary. Often, the escrow agreement will have release conditions that are contingent upon certain performance deliverables by the depositor and other obligations of the beneficiary.
A software escrow agreement is an escrow agreement that supports a software license agreement. In many cases, the escrow agent is asked to hold and dispose of software source code, build instructions and other proprietary information required by the beneficiary to support the licenses software if the depositor fails to meet their obligations of the license agreement.
Software-as-a-service escrow agreements are different from traditional software escrow agreements in that they often include many different and / or additional terms and conditions (i.e. credentials for the hosting provider to allow for takeover of the hosting environment, shorter release processes since down time in a SaaS environment is often immediate and can be permanent. Further, many SaaS escrow agreements include storage of the beneficiary’s data as well as periodic testing of hosting credentials to ensure that the beneficiary can leverage the escrow deposit materials to continue to use the SaaS application should the software vendor fail) because SaaS environments vary widely.
Any time a company is reliant upon proprietary technology for business critical functions, an escrow agreement should be considered to provide an action plan for continued functionality in the event of vendor failure. Virtually any technology, process, recipe, secret, or other element can be proven, documented, and stored for contingent release.
Expert escrow agents can successfully administer a wide range of escrow release conditions. The escrow agent should not be relied upon to prove or disprove the occurrence of release conditions, but rather they should administer their proven release process without prejudice. Escrow release conditions should be carefully negotiated as part of the overall agreement and associated escrow agreement.

Typical release conditions include:
  • Bankruptcy of the depositor (i.e. Software vendor)
  • Failure to meet support obligations of the license or services agreement.
  • Total cessation of business.
Less typical release conditions may include:
  • Acquisition by a competitor of beneficiary.
  • Fee increases in excess of some previously negotiated cap.
  • Sunsetting of a product Virtually any release condition can be administered by an experienced escrow agent provided that their process is clear and a dispute resolution process is clearly specified.
This is an often-negotiated component of the escrow. As a general rule of thumb, the beneficiary pays the escrow fees either directly or indirectly. It is also common for depositors to add a markup or administrative fees for their costs, efforts and risks associated with the escrow.
There are a few ways to handle this issue: The most common approach is to hire the escrow agent to test the materials held in their possession in a “simulated release” fashion to determine if all materials are present to support the technology without input from the depositor. This approach is the most independent method and removes risk for both the depositor and beneficiary. An alternative approach is for the beneficiary to witness preparation of the escrow deposit at the depositor’s location. This approach often omits much of the build up process as the depositor has the build environment functioning already.

PRAXIS’ Automated Escrow™ solution ensures that we’re always holding on to the most up-to-date version of the Deposit Materials available. 

PRAXIS Automated Escrow™ seamlessly integrates with source code repositories like GitHub and Bitbucket to ensure secure, weekly escrow deposits without manual intervention. Here’s how it works:

• Automated Deposits – PRAXIS connects directly to your version control system and automatically deposits source code, documentation, and other critical materials into escrow at predefined intervals or milestones.
• Immutable Storage – Deposits are stored securely with an Infinite Retention™ policy, ensuring that every version remains accessible for future verification or release events.
• Compliance & Security – PRAXIS is SOC 2 certified, providing enterprise-grade security and compliance for all escrow deposits.
• Continuous Verification – Our system verifies deposit integrity, ensuring the materials are properly captured and accessible when needed.
• Customizable Terms – Clients can define deposit schedules, verification requirements, and access conditions to align with their specific needs.

This streamlined approach removes the burden of manual uploads, enhances compliance, and ensures business continuity for all parties involved.

Security is our top priority. PRAXIS is SOC 2 compliant, adhering to the highest industry standards for data security, confidentiality, and integrity. We implement advanced firewalls, encryption protocols, and secure storage to safeguard your escrowed materials from unauthorized access. Additionally, we carry Errors & Omissions (E&O) insurance, providing an extra layer of financial protection. With PRAXIS, you can trust that your intellectual property remains protected at every stage of the escrow process.

Traditionally software and technology escrow deposits have been stored in media vault facilities designed for the protection and preservation of magnetic media. Increasingly escrow deposits and the associated user data are stored in an encrypted form on electronic vaults. This allows for significantly more frequent updates, easy redundancy and expedited release when needed.
The depositor and beneficiary are often at odds on this issue. Commonly depositors view a request or requirement for an escrow agreement as an insult or some form of distrust. Also, the escrow means extra work and risk for the depositor so they are often reluctant to agree to and fulfill the escrow. The beneficiary is simply trying to protect their business and their investment. As such, the escrow agreement should be negotiated in tandem with the larger agreement (i.e. Software license, SaaS agreement & etc.) and signed at the same time as the larger agreement. Once the larger agreement is signed, the beneficiary loses all leverage with regards to requiring the depositor to fulfill their escrow requirements. The signed escrow agreement is the first step on the continuum of escrow protection, but it Is critical because without the agreement in place the balance of the protections cannot be accessed.

Yes! PRAXIS offers flexible and customizable escrow agreements tailored to your unique business requirements. Whether you need specific release conditions, verification services, or multi-party agreements, our team works closely with you to craft an escrow arrangement that provides maximum value and protection. We ensure your escrow terms align with your risk management strategy, giving you peace of mind that your investment is fully safeguarded.

US law is most defined in terms of escrow. US law is often considered the best framework for software and SaaS escrow agreements due to its strong legal precedents, business-friendly environment, and enforceability. Here’s why:

• Established Legal Framework – The US has well-developed intellectual property (IP) laws that protect software and SaaS assets, including copyrights, trade secrets, and patents. This provides clear protections for both software vendors and beneficiaries.
• Enforceability of Contracts – The US legal system has a long history of upholding technology and escrow agreements, making contract enforcement more predictable and reliable compared to jurisdictions with less-developed case law in this area.
• Business-Friendly Regulations – US contract law allows for customized, flexible escrow terms, enabling businesses to tailor agreements to their specific needs without excessive regulatory burdens.
• Trust in Dispute Resolution – The US legal system provides strong dispute resolution mechanisms, including arbitration and litigation, which are widely recognized and respected in international business transactions.
• International Acceptance – Many global companies prefer US law for escrow agreements because it is widely understood, often neutral in cross-border contracts, and backed by extensive precedent in technology transactions.

For software and SaaS escrow agreements, US law provides the strongest combination of security, enforceability, and flexibility, making it the preferred choice for businesses worldwide.

The typical release process includes a written request for a release of the deposit materials and requires a sworn statement by an officer of the beneficiary confirming the limits on usage allowed under the license agreement. The length of the escrow release process can vary from a few days to 90 days depending upon the negotiated circumstances and importance of the technology.

The standard escrow deposit release timeframe is 30 days, but PRAXIS offers expedited release options to meet critical business needs. With our premium service, materials can be released in as little as 5 days or even 2 days in urgent situations. Our streamlined process ensures beneficiaries gain access to escrowed materials quickly and securely when a release condition is met.

Not all escrow providers offer the same level of service, security, and innovation. PRAXIS stands out with:

• Automated Escrow™ – Our proprietary solution streamlines deposits, ensuring compliance with escrow agreements without manual intervention.
• Infinite Retention™ – Unlike providers that delete deposits after a set period, we securely retain escrow materials as long as needed.
• SOC 2 Compliance – We meet the highest security standards to protect your intellectual property.
• Experience & Expertise – Our team of veteran escrow professionals has decades of industry knowledge.
• Fast, Personalized Service – We provide responsive, U.S.-based customer support, ensuring your escrow needs are met efficiently.

With PRAXIS, you get a trusted partner committed to securing your software investments and business continuity.