The conditions for shorting are that you sign documents pledging every asset you own, which they will not hesitate to claim against should you not make your margin call. You may not be approved for any margin account based on your credit status and the value of your assets.

Shorting requires margin and maintenance. The shares you sell short must be borrowed from someone; in some cases they may not be available for borrowing so you can't short. You invest the original margin you put up and should the price of the share go up instead of down, maintenance margin to top up the account will be called for to be paid within 24 hours - if you cannot come up with the margin they begin the process to claim your assets - starting with all the cash in your accounts, if they have not taken it already. If that's not enough, then they close your position, and any losses become the next basis for claim. Then they would sell any shares you have that are not encumbered, in other words shares you own that were paid for with cash. Then you could possibly take out a loan for what you owe, if you can't, then they come after everything you own. 

If it's a dividend paying stock, and dividends are declared, you must pay the dividends, not the company declaring the dividend.

Shorting low priced/penny stocks is either difficult or impossible depending on the institution. If allowed, sometimes you have to put up two or three times the price of the stock as initial margin.

Best way to trade: cash account, no margin (playing long on margin offers the same dangers should your stock go down). The big short sellers tend to be people that trade with other people's money - funds, etc. and they usually cover the trade with some kind of offset derivative to minimize losses hoping to make money on the spread. There's a lot of braggadocio from small traders about short selliing - it's projected among certain people as a kind of macho thing, but it's as often as not BS.