{"head":{"title":"What Is Source Code Escrow? Definition and Example","description":"Source code escrow puts a vendor's code with a neutral third party, released to the customer if agreed events happen. When it is worth it, mistakes.","canonical":"https://oceanlab.in/glossary/source-code-escrow"},"crumbs":[{"name":"Home","path":"/"},{"name":"Glossary","path":"/glossary"},{"name":"source code escrow","path":"/glossary/source-code-escrow"}],"slug":"source-code-escrow","term":"Source code escrow","aka":["software escrow","code escrow"],"category":"Buying software","short":"An arrangement where a vendor's source code is held by a neutral third party and released to the customer if agreed events happen.","body":[["Escrow is used when a customer relies on software it does not own, such as licensed software or a platform the vendor keeps. The vendor deposits the code and build instructions with an escrow agent. If a trigger event happens, for example the vendor goes out of business or stops supporting the product, the agent releases the deposit to the customer."],["When the customer owns the code outright through an ",{"href":"/glossary/ip-assignment","text":"IP assignment"}," and holds the repository, escrow is usually not needed."]],"why":["Escrow protects against being stuck with critical software nobody can fix. It is common in regulated sectors and in large licence deals, where a business cannot afford to lose a system overnight."],"example":["A bank licenses a loan decision engine from a small vendor. The contract requires quarterly escrow deposits, including build scripts, and a yearly test where an independent party checks the deposit can actually be built."],"inBuild":["For custom product builds, the simpler route is usually the client owning the repository and cloud accounts from day one, which makes escrow unnecessary."],"mistakes":[["Depositing code once and never updating it."],["No build instructions or dependencies in the deposit, so the code cannot be run."],["Vague release triggers that lead to a dispute exactly when the customer needs the code."]],"related":[{"href":"/glossary/ip-assignment","label":"IP assignment","detail":"The part of a contract that transfers ownership of code, designs and other work from the people who made them to the client."},{"href":"/glossary/handover","label":"Handover (software handover)","detail":"Moving the code, accounts, documents and know-how of a product from the team that built it to the team that will run it."},{"href":"/glossary/vendor-lock-in","label":"Vendor lock-in","detail":"When leaving a supplier, platform or tool would cost so much time or money that you are effectively stuck with it."},{"href":"/glossary/sla","label":"SLA (service level agreement)","detail":"A contract that promises a level of service, such as uptime or support response time, and says what happens if it is missed."}],"tools":[],"links":[{"href":"/questions/who-owns-the-code","label":"Who owns the code when you hire a software agency?","detail":"Question"},{"href":"/software/banking","label":"Software for banking","detail":"Banking systems, controls and regulation."}],"sources":[],"legal":false,"updatedAt":"2026-10-25"}