California  |  Real Estate Law

The subject is covered, insofar as California statutes go, in Civil Code sections 1695.1 through 1695.17, under the heading of "Home Equity Sales Contracts."

Section 1695.14 does indeed provide for a two-year rescission period.....however, the grounds for rescission are quite limited (see 1695.13 for the ground - "unconscionable advantage").

Further, the entire topic of "Home Equity Sales Contracts" specifically excludes true deeds in lieu of foreclosure - see subsection 1695.1(a)(2). So, in California at least, it boils down to whether you really mean "home equity sales contract" (in which a third party, not the lender, acquires the defaulting owner's equity position) rather than "deed in lieu of foreclosure" as you say, where the lender, not a third party, accepts a deed from the borrower rather than foreclosing.

The two-year rescission period applies only to the former, not the latter, and even in the case of the former, only if the deal was unconscionable.

As to New York law, I have no idea, and so can't make comparisons.