is the partner your client as well? If not, then what they did with that half is irrelevant to you and if it was not an investment property then they shouldn't have been able to do the 1031 exchange, 

What paperwork do you have? 1099-S? and for what amount? The property was sold in NJ so you would do a nonresident nj return for the sale for the gain so the withholding might not be refunded but you still need to file it. 

Is this an existing client or new client? I'd be asking a lot of questions on if this was a second home? Rental property? (was it rented out? What did they do with it for the last 3 years? Being told 1031 sets off a lot of questions for me