The Selhurst Park club agreed a deal with Town for Lee for around the £650,000 mark last summer, but it is understood they have failed to make the required payments for the player and as a consequence have had their ability to add players to their squad removed by the Football League.
Confirming the news Palace boss Warnock said: "We are aware of the embargo, we just have to get on with it. I'm hopeful it will be lifted in the next few weeks so in the mean time we just have to crack on with things."
Palace are no strangers for transfer embargos this term, during August of this year they also were handed a transfer embargo after they failed to pay the wages of their playing staff in full. The ban was lifted on August 24th.
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