diff --git a/RELNOTES b/RELNOTES
index 6b7aed3f..59675213 100644
--- a/RELNOTES
+++ b/RELNOTES
@@ -168,6 +168,10 @@ and for prodding me into improving it.
 - Abandoned or dissociated (err condition) leases now remove any related
   dynamic dns bindings.  Thanks to a patch from Patrick Schoo.
 
+- Attempting to write a new lease file to replace a corrupt (due to
+  encountering non-retryable errors during writing) lease file should
+  no longer result in an infinite recursion.
+
 			Changes since 3.0.4rc1
 
 - The dhcp-options.5 manpage was updated to correct indentation errors
diff --git a/server/db.c b/server/db.c
index 7431fa7d..004e840b 100644
--- a/server/db.c
+++ b/server/db.c
@@ -34,7 +34,7 @@
 
 #ifndef lint
 static char copyright[] =
-"$Id: db.c,v 1.73 2006/06/06 16:35:18 dhankins Exp $ Copyright (c) 2004-2006 Internet Systems Consortium.  All rights reserved.\n";
+"$Id: db.c,v 1.74 2006/07/19 16:44:47 dhankins Exp $ Copyright (c) 2004-2006 Internet Systems Consortium.  All rights reserved.\n";
 #endif /* not lint */
 
 #include "dhcpd.h"
@@ -794,11 +794,14 @@ int new_lease_file ()
 	char backfname [512];
 	TIME t;
 	int db_fd;
+	int db_validity;
 	FILE *new_db_file;
 
 	/* Make a temporary lease file... */
 	GET_TIME (&t);
 
+	db_validity = lease_file_is_corrupt;
+
 	/* %Audit% Truncated filename causes panic. %2004.06.17,Safe%
 	 * This should never happen since the path is a configuration
 	 * variable from build-time or command-line.  But if it should,
@@ -835,6 +838,11 @@ int new_lease_file ()
 	if (errno != 0)
 		goto fail;
 
+	/* At this point we have a new lease file that, so far, could not
+	 * be described as either corrupt nor valid.
+	 */
+	lease_file_is_corrupt = 0;
+
 	/* Write out all the leases that we know of... */
 	counting = 0;
 	if (!write_leases ())
@@ -881,11 +889,10 @@ int new_lease_file ()
 	}
 
 	counting = 1;
-	lease_file_is_corrupt = 0;
 	return 1;
 
       fail:
-	lease_file_is_corrupt = 1;
+	lease_file_is_corrupt = db_validity;
       fdfail:
 	unlink (newfname);
 	return 0;