Capitalization for "Federal"

Solution 1:

The Associated Press Stylebook has this entry for federal:

Use a capital letter for the architectural style and for corporate or governmental bodies that use the word as part of their formal names: Federal Express, the Federal Trade Commission.

Lowercase when used as an adjective to distinguish something from state, county, city, town or private entities: federal assistance, federal court, the federal government, a federal judge.

So, if you are following AP style, your sentence would be:

You need to know that federal law bars the lender from accelerating the mortgage on your personal residence because you transferred it to your living revocable trust.

Solution 2:

The Federal Government has a website entry on this topic. http://www.plainlanguage.gov/howto/quickreference/dash/dashfederal.cfm

It says:

This question comes up rather frequently. For some reason, many people think the word federal always warrants a capital F. Actually, you should capitalize federal only when it is part of a proper noun, that is, the official name of a particular or unique person, place, or thing. So you would only capitalize federal when you use it in the name of a federal agency, an act, or some other proper noun.

Federal Bureau of Investigation
Federal Insurance Contributions Act
Federal Trade Commission
Federal Water Pollution Control Act
Federal Reserve Board

When writing about the Federal Government in its official capacity using the term as an official title, you should capitalize both Federal and Government.

Most of the time, we use federal simply as a form of general classification, which would not require us to capitalize it.

Once a year, federal employees have an opportunity to choose a different health care provider.

Many issues we address each day are subject to federal, state, and local laws.

So, the next time you are writing about federal programs or issues, think twice about capitalization. More often than not, the correct answer to this question is federal not Federal.

Solution 3:

AP style is alright in regular writing and in the field of publishing. It does not always apply in the field of law. In the law, one writes "Federal and state law..." to distinguish Federal from state. It is inappropriate to generalize from the AP style manual to any particular field and the rules of grammar regarding capitalization vary depending on the circumstances. Since the above example refers to federal law in general (although it is implicitly distinguishing it from state law regarding mortgages), it should be a lowercase "f". If one were writing "state and Federal law", the "f" would be capitalized.