query: what does permitted exception mean

I'll take a stab that the permitted part is lender based.

A title policy can include any exception that is relevant. Whether or not it's permitted would be the determined by the insured, either the lender or the homeowner.

For instance, a mortgage lender may prohibit exceptions for restrictive covenant violations, but permit exceptions for oil and gas leases. I know that might seem confusing, but for a question like this, you really need the person giving permission to define which exceptions they will allow.

Am I warm? If not, let me know and I'll take another stab at it. ;)