diff --git a/ChangeLog b/ChangeLog
index 119eb1c0bb..e834d5720c 100644
--- a/ChangeLog
+++ b/ChangeLog
@@ -399,6 +399,8 @@ Changes in version 0.1.2.18 - 2007-10-28
       is fishy. Resolves bug 463.
     - Don't reset trusted dir server list when we set a configuration
       option. Patch from Robert Hogan.
+    - Don't try to create the datadir when running --verify-config or
+      --hash-password. Resolves bug 540.
 
 
 Changes in version 0.2.0.9-alpha - 2007-10-24
diff --git a/src/or/config.c b/src/or/config.c
index a7650637f1..83fec4e1bb 100644
--- a/src/or/config.c
+++ b/src/or/config.c
@@ -1004,7 +1004,8 @@ options_act_reversible(or_options_t *old_options, char **msg)
   }
 
   /* Ensure data directory is private; create if possible. */
-  if (check_private_dir(options->DataDirectory, CPD_CREATE)<0) {
+  if (check_private_dir(options->DataDirectory,
+                        running_tor ? CPD_CREATE : CPD_CHECK)<0) {
     char buf[1024];
     int tmp = tor_snprintf(buf, sizeof(buf),
               "Couldn't access/create private data directory \"%s\"",