I don't see how you can have a "joint" 1099-S, since the form only allows for a single SSN/TIN of the seller. It would have to be either you or your spouse. If filing separate, then the one whose SSN/TIN is on the form is the one who would be expected to report it.
Overall, I have no clue the impact or legalities of this, as my state does not have an income tax. So I've no idea how this impacts said legality of your state taxes. It's a good bet that the sale of the property has been reported to the state (as it definitely has be reported to the IRS) and I don't know if the fact it was jointly owned will raise flags with your state taxing authorities.
You may want to seek legal advise from a local CPA or tax professional.
