diff --git a/commands/server_test.go b/commands/server_test.go
index 05d21a5165b..f9c6bf8f9bb 100644
--- a/commands/server_test.go
+++ b/commands/server_test.go
@@ -17,6 +17,8 @@ import (
 	"fmt"
 	"net/http"
 	"os"
+	"path"
+	"path/filepath"
 	"runtime"
 	"strings"
 	"testing"
@@ -24,6 +26,8 @@ import (
 
 	"github.com/gohugoio/hugo/config"
 	"github.com/gohugoio/hugo/helpers"
+	"github.com/gohugoio/hugo/htesting"
+	"github.com/gohugoio/hugo/hugofs"
 
 	qt "github.com/frankban/quicktest"
 )
@@ -131,3 +135,100 @@ ERROR 2018/10/07 13:11:12 Rebuild failed: logged 1 error(s)
 func isWindowsCI() bool {
 	return runtime.GOOS == "windows" && os.Getenv("CI") != ""
 }
+
+// Issue 7043
+func TestServerReloadWithBadData(t *testing.T) {
+	c := qt.New(t)
+	dir, clean, err := htesting.CreateTempDir(hugofs.Os, "hugo-cli")
+
+	cfgStr := `
+
+baseURL = "https://example.org"
+title = "Hugo Commands"
+
+`
+	os.MkdirAll(filepath.Join(dir, "public"), 0777)
+	os.MkdirAll(filepath.Join(dir, "data"), 0777)
+	os.MkdirAll(filepath.Join(dir, "layouts"), 0777)
+
+	writeFile(t, filepath.Join(dir, "config.toml"), cfgStr)
+	writeFile(t, filepath.Join(dir, "content", "p1.md"), `
+---
+title: "P1"
+weight: 1
+---
+
+Content
+
+`)
+	defer clean()
+	c.Assert(err, qt.IsNil)
+
+	// The first time we write to the data file, the JSON is valid.
+	writeFile(t, path.Join(dir, "data", "testdata.json"), `{
+"key1": "value1",
+"key2": "value2"
+}`)
+
+	writeFile(t, path.Join(dir, "layouts", "index.html"), `{{- range $k, $v := .Site.Data.testdata -}}
+<p>{{$k}} has the value {{$v}}</p>
+{{ end }}`)
+
+	port := 1331
+
+	b := newCommandsBuilder()
+	stop := make(chan bool)
+	scmd := b.newServerCmdSignaled(stop)
+
+	defer func() {
+		// Stop the server.
+		stop <- true
+	}()
+
+	cmd := scmd.getCommand()
+	cmd.SetArgs([]string{
+		"-s=" + dir,
+		fmt.Sprintf("-p=%d", port),
+		"-d=" + path.Join(dir, "public"),
+	})
+
+	go func() {
+		_, err = cmd.ExecuteC()
+		c.Assert(err, qt.IsNil)
+	}()
+
+	// There is no way to know exactly when the server is ready for connections.
+	// We could improve by something like https://golang.org/pkg/net/http/httptest/#Server
+	// But for now, let us sleep and pray!
+	time.Sleep(500 * time.Millisecond)
+
+	// Break the JSON by removing the comma
+	writeFile(t, path.Join(dir, "data", "testdata.json"), `{
+"key1": "value1"
+"key2": "value2"
+}`)
+
+	// Wait for the server to make the change
+	time.Sleep(500 * time.Millisecond)
+
+	// Fix the JSON and add a line
+	writeFile(t, path.Join(dir, "data", "testdata.json"), `{
+"key1": "value1",
+"key2": "value2",
+"key3": "value3"
+}`)
+
+	// Wait for the server to make the change
+	time.Sleep(500 * time.Millisecond)
+
+	exp := `<p>key1 has the value value1</p>
+<p>key2 has the value value2</p>
+<p>key3 has the value value3</p>
+`
+
+	af, err := os.ReadFile(path.Join(dir, "public", "index.html"))
+	c.Assert(err, qt.IsNil)
+	c.Assert(string(af), qt.Equals, exp)
+
+	return
+}
diff --git a/lazy/init.go b/lazy/init.go
index e2e70072ea4..58594b7f5a7 100644
--- a/lazy/init.go
+++ b/lazy/init.go
@@ -76,6 +76,10 @@ func (ini *Init) Do() (interface{}, error) {
 		panic("init is nil")
 	}
 
+	// Reset the error in case we have already called Do, e.g., when hugo
+	// server is running.
+	ini.err = nil
+
 	ini.init.Do(func() {
 		prev := ini.prev
 		if prev != nil {
diff --git a/lazy/init_test.go b/lazy/init_test.go
index 2051f6b1a5f..e136f4a2dc8 100644
--- a/lazy/init_test.go
+++ b/lazy/init_test.go
@@ -220,3 +220,24 @@ func TestInitBranchOrder(t *testing.T) {
 
 	c.Assert(state.V2, qt.Equals, "ABAB")
 }
+
+// Sometimes need to call the same *Init's Do method multiple times, e.g., when
+// hugo server is running. In these cases, we need to make sure that an error
+// returned by an earlier call does not persist in memory for later calls.
+// See issue 7043
+func TestAvoidRepeatDoError(t *testing.T) {
+	r := false
+	i := New().Add(func() (interface{}, error) {
+		if r {
+			return nil, nil
+		}
+		return nil, errors.New("r is false")
+	})
+	i.Do()
+	r = true
+	i.Do()
+	if i.err != nil {
+		t.Errorf("expected a nil error but got: %v", i.err)
+	}
+
+}