An indemnification escrow is a portion of the purchase price held by an independent escrow agent (typically a law firm or specialist escrow provider) for a defined period after completion, available to satisfy buyer claims against the seller for warranty or indemnity breaches. In Australian sub-$20M deals, indemnification escrows typically range from 5% to 15% of the purchase price, with release periods of 12 to 24 months.
The escrow is typically released in tranches (for example, 50% at 12 months and the balance at the end of the survival period for general warranties), with claimed amounts retained beyond the release date pending resolution.