diff --git a/hub-client/src/services/projectStorage.ts b/hub-client/src/services/projectStorage.ts
index 30ba6a1c..fb3d1c4d 100644
--- a/hub-client/src/services/projectStorage.ts
+++ b/hub-client/src/services/projectStorage.ts
@@ -4,70 +4,16 @@
  * This module provides CRUD operations for project entries and integrates
  * with the schema versioning/migration system.
  */
-import { openDB } from 'idb';
-import type { IDBPDatabase } from 'idb';
 import type { ProjectEntry } from '../types/project';
 import type { ExportData, UserSettings } from './storage/types';
 import {
-  DB_NAME,
   STORES,
-  CURRENT_DB_VERSION,
   CURRENT_SCHEMA_VERSION,
-  getStructuralMigrations,
-  runMigrations,
+  getDb,
+  resetDbPromise,
   getSchemaVersion,
 } from './storage';
 
-/**
- * Cached database promise.
- * Reset to null if database needs to be reopened.
- */
-let dbPromise: Promise<IDBPDatabase> | null = null;
-
-/**
- * Get or open the database, running migrations as needed.
- *
- * This function:
- * 1. Opens the database with the current version
- * 2. Runs structural migrations (store/index creation) in the upgrade callback
- * 3. Runs data transformation migrations after the database is open
- */
-async function getDb(): Promise<IDBPDatabase> {
-  if (!dbPromise) {
-    dbPromise = (async () => {
-      // Open the database with structural migrations in the upgrade callback
-      const db = await openDB(DB_NAME, CURRENT_DB_VERSION, {
-        upgrade(db, oldVersion, _newVersion, transaction) {
-          // Create projects store if this is a fresh database
-          if (!db.objectStoreNames.contains(STORES.PROJECTS)) {
-            const store = db.createObjectStore(STORES.PROJECTS, { keyPath: 'id' });
-            store.createIndex('indexDocId', 'indexDocId', { unique: true });
-            store.createIndex('lastAccessed', 'lastAccessed');
-          }
-
-          // Run structural migrations for version upgrades
-          // oldVersion is 0 for new databases, so we start from 1
-          const fromVersion = oldVersion || 1;
-          const structuralMigrations = getStructuralMigrations(fromVersion);
-
-          for (const migration of structuralMigrations) {
-            if (migration.structural) {
-              console.log(`Running structural migration v${migration.version}: ${migration.description}`);
-              migration.structural(db, transaction);
-            }
-          }
-        },
-      });
-
-      // Run data transformation migrations after the database is open
-      await runMigrations(db);
-
-      return db;
-    })();
-  }
-  return dbPromise;
-}
-
 /**
  * Generate a unique ID for a new project entry.
  */
@@ -279,8 +225,6 @@ export async function getDatabaseSchemaVersion(): Promise<number> {
  * Call this when you need to force a reconnection (e.g., after schema changes).
  */
 export function closeDatabase(): void {
-  if (dbPromise) {
-    dbPromise.then(db => db.close()).catch(() => {});
-    dbPromise = null;
-  }
+  getDb().then(db => db.close()).catch(() => {});
+  resetDbPromise();
 }
diff --git a/hub-client/src/services/storage/db.ts b/hub-client/src/services/storage/db.ts
new file mode 100644
index 00000000..330968d4
--- /dev/null
+++ b/hub-client/src/services/storage/db.ts
@@ -0,0 +1,71 @@
+/**
+ * Shared database initialization.
+ *
+ * Both projectStorage and userSettings import getDb from here,
+ * ensuring the upgrade callback always runs when the database is first created.
+ */
+
+import { openDB } from 'idb';
+import type { IDBPDatabase } from 'idb';
+import { DB_NAME, STORES } from './types';
+import { CURRENT_DB_VERSION, getStructuralMigrations } from './migrations';
+import { runMigrations } from './migrationRunner';
+
+/**
+ * Cached database promise.
+ * Reset to null if database needs to be reopened.
+ */
+let dbPromise: Promise<IDBPDatabase> | null = null;
+
+/**
+ * Get or open the database, running migrations as needed.
+ *
+ * This function:
+ * 1. Opens the database with the current version
+ * 2. Runs structural migrations (store/index creation) in the upgrade callback
+ * 3. Runs data transformation migrations after the database is open
+ *
+ * The database instance is cached — subsequent calls return the same promise.
+ */
+export async function getDb(): Promise<IDBPDatabase> {
+  if (!dbPromise) {
+    dbPromise = (async () => {
+      const db = await openDB(DB_NAME, CURRENT_DB_VERSION, {
+        upgrade(db, oldVersion, _newVersion, transaction) {
+          // Create projects store if this is a fresh database
+          if (!db.objectStoreNames.contains(STORES.PROJECTS)) {
+            const store = db.createObjectStore(STORES.PROJECTS, { keyPath: 'id' });
+            store.createIndex('indexDocId', 'indexDocId', { unique: true });
+            store.createIndex('lastAccessed', 'lastAccessed');
+          }
+
+          // Run structural migrations for version upgrades
+          // oldVersion is 0 for new databases, so we start from 1
+          const fromVersion = oldVersion || 1;
+          const structuralMigrations = getStructuralMigrations(fromVersion);
+
+          for (const migration of structuralMigrations) {
+            if (migration.structural) {
+              console.log(`Running structural migration v${migration.version}: ${migration.description}`);
+              migration.structural(db, transaction);
+            }
+          }
+        },
+      });
+
+      // Run data transformation migrations after the database is open
+      await runMigrations(db);
+
+      return db;
+    })();
+  }
+  return dbPromise;
+}
+
+/**
+ * Reset the cached database promise.
+ * Call this if the database connection is lost or needs to be reopened.
+ */
+export function resetDbPromise(): void {
+  dbPromise = null;
+}
diff --git a/hub-client/src/services/storage/index.ts b/hub-client/src/services/storage/index.ts
index e7c4b9db..1bfda275 100644
--- a/hub-client/src/services/storage/index.ts
+++ b/hub-client/src/services/storage/index.ts
@@ -39,6 +39,9 @@ export {
   MigrationFailedError,
 } from './migrationRunner';
 
+// Database initialization
+export { getDb, resetDbPromise } from './db';
+
 // Utilities
 export {
   generateColorFromId,
diff --git a/hub-client/src/services/userSettings.ts b/hub-client/src/services/userSettings.ts
index 34a11ab6..917a7de9 100644
--- a/hub-client/src/services/userSettings.ts
+++ b/hub-client/src/services/userSettings.ts
@@ -5,28 +5,16 @@
  * User identity is used for presence features (cursor colors, display names).
  */
 
-import { openDB } from 'idb';
-import type { IDBPDatabase } from 'idb';
 import type { UserSettings } from './storage/types';
 import {
-  DB_NAME,
   STORES,
-  CURRENT_DB_VERSION,
+  getDb,
   generateColorFromId,
   generateAnonymousName,
   isValidHexColor,
   isValidUserName,
 } from './storage';
 
-/**
- * Get the database instance.
- * Note: This opens the DB independently to avoid circular dependencies with projectStorage.
- * The DB version and migration system ensures consistency.
- */
-async function getDb(): Promise<IDBPDatabase> {
-  return openDB(DB_NAME, CURRENT_DB_VERSION);
-}
-
 /**
  * Get the current user identity.
  *
@@ -35,12 +23,6 @@ async function getDb(): Promise<IDBPDatabase> {
  */
 export async function getUserIdentity(): Promise<UserSettings> {
   const db = await getDb();
-
-  // Check if store exists
-  if (!db.objectStoreNames.contains(STORES.USER_SETTINGS)) {
-    throw new Error('User settings store not found. Database may not be fully initialized.');
-  }
-
   const settings = await db.get(STORES.USER_SETTINGS, 'identity');
 
   if (settings) {
diff --git a/package-lock.json b/package-lock.json
index 32a1e780..21e5790e 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -328,7 +328,6 @@
       "version": "8.50.1",
       "dev": true,
       "license": "MIT",
-      "peer": true,
       "dependencies": {
         "@typescript-eslint/scope-manager": "8.50.1",
         "@typescript-eslint/types": "8.50.1",
@@ -535,7 +534,6 @@
       "version": "8.15.0",
       "dev": true,
       "license": "MIT",
-      "peer": true,
       "bin": {
         "acorn": "bin/acorn"
       },
@@ -634,6 +632,7 @@
     "hub-client/node_modules/dompurify": {
       "version": "3.2.7",
       "license": "(MPL-2.0 OR Apache-2.0)",
+      "peer": true,
       "optionalDependencies": {
         "@types/trusted-types": "^2.0.7"
       }
@@ -666,7 +665,6 @@
       "version": "9.39.2",
       "dev": true,
       "license": "MIT",
-      "peer": true,
       "dependencies": {
         "@eslint-community/eslint-utils": "^4.8.0",
         "@eslint-community/regexpp": "^4.12.1",
@@ -1053,6 +1051,7 @@
     "hub-client/node_modules/marked": {
       "version": "14.0.0",
       "license": "MIT",
+      "peer": true,
       "bin": {
         "marked": "bin/marked.js"
       },
@@ -1395,7 +1394,6 @@
       "integrity": "sha512-CGOfOJqWjg2qW/Mb6zNsDm+u5vFQ8DxXfbM09z69p5Z6+mE1ikP2jUXw+j42Pf1XTYED2Rni5f95npYeuwMDQA==",
       "dev": true,
       "license": "MIT",
-      "peer": true,
       "dependencies": {
         "@babel/code-frame": "^7.29.0",
         "@babel/generator": "^7.29.0",
@@ -1868,7 +1866,6 @@
         }
       ],
       "license": "MIT",
-      "peer": true,
       "engines": {
         "node": ">=18"
       },
@@ -1892,7 +1889,6 @@
         }
       ],
       "license": "MIT",
-      "peer": true,
       "engines": {
         "node": ">=18"
       }
@@ -1914,7 +1910,6 @@
       "resolved": "https://registry.npmjs.org/@dnd-kit/core/-/core-6.3.1.tgz",
       "integrity": "sha512-xkGBRQQab4RLwgXxoqETICr6S5JlogafbhNsidmrkVv2YRs5MLwpjoF2qpiGjQt8S9AoxtIV603s0GIUpY5eYQ==",
       "license": "MIT",
-      "peer": true,
       "dependencies": {
         "@dnd-kit/accessibility": "^3.1.1",
         "@dnd-kit/utilities": "^3.2.2",
@@ -3352,7 +3347,8 @@
       "resolved": "https://registry.npmjs.org/@types/aria-query/-/aria-query-5.0.4.tgz",
       "integrity": "sha512-rfT93uj5s0PRL7EzccGMs3brplhcrghnDoV26NqKhCAS1hVo+WdNsPvE/yb6ilfr5hi2MEk6d5EWJTKdxg8jVw==",
       "dev": true,
-      "license": "MIT"
+      "license": "MIT",
+      "peer": true
     },
     "node_modules/@types/babel__core": {
       "version": "7.20.5",
@@ -3452,7 +3448,6 @@
       "integrity": "sha512-zWW5KPngR/yvakJgGOmZ5vTBemDoSqF3AcV/LrO5u5wTWyEAVVh+IT39G4gtyAkh3CtTZs8aX/yRM82OfzHJRg==",
       "dev": true,
       "license": "MIT",
-      "peer": true,
       "dependencies": {
         "undici-types": "~7.16.0"
       }
@@ -3722,6 +3717,7 @@
       "integrity": "sha512-Cxwpt2SfTzTtXcfOlzGEee8O+c+MmUgGrNiBcXnuWxuFJHe6a5Hz7qwhwe5OgaSYI0IJvkLqWX1ASG+cJOkEiA==",
       "dev": true,
       "license": "MIT",
+      "peer": true,
       "engines": {
         "node": ">=10"
       },
@@ -3865,7 +3861,6 @@
         }
       ],
       "license": "MIT",
-      "peer": true,
       "dependencies": {
         "baseline-browser-mapping": "^2.9.0",
         "caniuse-lite": "^1.0.30001759",
@@ -4260,7 +4255,8 @@
       "resolved": "https://registry.npmjs.org/dom-accessibility-api/-/dom-accessibility-api-0.5.16.tgz",
       "integrity": "sha512-X7BJ2yElsnOJ30pZF4uIIDfBEVgF4XEBxL9Bxhy6dnrm5hkzqmsWHGTiHqRiITNhMyFLyAiWndIJP7Z1NTteDg==",
       "dev": true,
-      "license": "MIT"
+      "license": "MIT",
+      "peer": true
     },
     "node_modules/dunder-proto": {
       "version": "1.0.1",
@@ -4481,7 +4477,6 @@
       "resolved": "https://registry.npmjs.org/express/-/express-5.2.1.tgz",
       "integrity": "sha512-hIS4idWWai69NezIdRt2xFVofaF4j+6INOpJlVOLDO8zXGpUVEVzIYk12UUi2JzjEzWL3IOAxcTubgz9Po0yXw==",
       "license": "MIT",
-      "peer": true,
       "dependencies": {
         "accepts": "^2.0.0",
         "body-parser": "^2.2.1",
@@ -4818,7 +4813,6 @@
       "resolved": "https://registry.npmjs.org/hono/-/hono-4.12.7.tgz",
       "integrity": "sha512-jq9l1DM0zVIvsm3lv9Nw9nlJnMNPOcAtsbsgiUhWcFzPE99Gvo6yRTlszSLLYacMeQ6quHD6hMfId8crVHvexw==",
       "license": "MIT",
-      "peer": true,
       "engines": {
         "node": ">=16.9.0"
       }
@@ -5113,7 +5107,6 @@
       "integrity": "sha512-Cvc9WUhxSMEo4McES3P7oK3QaXldCfNWp7pl2NNeiIFlCoLr3kfq9kb1fxftiwk1FLV7CvpvDfonxtzUDeSOPg==",
       "dev": true,
       "license": "MIT",
-      "peer": true,
       "dependencies": {
         "cssstyle": "^4.2.1",
         "data-urls": "^5.0.0",
@@ -5222,6 +5215,7 @@
       "integrity": "sha512-h5bgJWpxJNswbU7qCrV0tIKQCaS3blPDrqKWx+QxzuzL1zGUzij9XCWLrSLsJPu5t+eWA/ycetzYAO5IOMcWAQ==",
       "dev": true,
       "license": "MIT",
+      "peer": true,
       "bin": {
         "lz-string": "bin/bin.js"
       }
@@ -5676,6 +5670,7 @@
       "integrity": "sha512-Qb1gy5OrP5+zDf2Bvnzdl3jsTf1qXVMazbvCoKhtKqVs4/YK4ozX4gKQJJVyNe+cajNPn0KoC0MC3FUmaHWEmQ==",
       "dev": true,
       "license": "MIT",
+      "peer": true,
       "dependencies": {
         "ansi-regex": "^5.0.1",
         "ansi-styles": "^5.0.0",
@@ -5768,7 +5763,6 @@
       "resolved": "https://registry.npmjs.org/react/-/react-19.2.4.tgz",
       "integrity": "sha512-9nfp2hYpCwOjAN+8TZFGhtWEwgvWHXqESH8qT89AT/lWklpLON22Lc8pEtnpsZz7VmawabSU0gCjnj8aC0euHQ==",
       "license": "MIT",
-      "peer": true,
       "engines": {
         "node": ">=0.10.0"
       }
@@ -5778,7 +5772,6 @@
       "resolved": "https://registry.npmjs.org/react-dom/-/react-dom-19.2.4.tgz",
       "integrity": "sha512-AXJdLo8kgMbimY95O2aKQqsz2iWi9jMgKJhRBAxECE4IFxfcazB2LmzloIoibJI3C12IlY20+KFaLv+71bUJeQ==",
       "license": "MIT",
-      "peer": true,
       "dependencies": {
         "scheduler": "^0.27.0"
       },
@@ -5791,7 +5784,8 @@
       "resolved": "https://registry.npmjs.org/react-is/-/react-is-17.0.2.tgz",
       "integrity": "sha512-w2GsyukL62IJnlaff/nRegPQR94C/XXamvMWmSHRJ4y7Ts/4ocGRmTHvOs8PSE6pB3dWOrD/nueuU5sduBsQ4w==",
       "dev": true,
-      "license": "MIT"
+      "license": "MIT",
+      "peer": true
     },
     "node_modules/react-refresh": {
       "version": "0.18.0",
@@ -5853,8 +5847,7 @@
       "version": "6.0.0",
       "resolved": "https://registry.npmjs.org/reveal.js/-/reveal.js-6.0.0.tgz",
       "integrity": "sha512-RayDr1FL3Jglnf6p9xHGJ0U18va96PiuLs/JHnd1cdDOXvC+3lsXKe6ujl7PX0pvnhNW2Tpqnr6PEKpJVO2exw==",
-      "license": "MIT",
-      "peer": true
+      "license": "MIT"
     },
     "node_modules/reveal.js-menu": {
       "version": "2.1.0",
@@ -6516,7 +6509,6 @@
       "resolved": "https://registry.npmjs.org/typescript/-/typescript-5.9.3.tgz",
       "integrity": "sha512-jl1vZzPDinLr9eUt3J/t7V6FgNEw9QjvBPdysz9KfQDD41fQrC2Y4vKQdiaUpFT4bXlb1RHhLpp8wtm6M5TgSw==",
       "license": "Apache-2.0",
-      "peer": true,
       "bin": {
         "tsc": "bin/tsc",
         "tsserver": "bin/tsserver"
@@ -6609,7 +6601,6 @@
       "integrity": "sha512-w+N7Hifpc3gRjZ63vYBXA56dvvRlNWRczTdmCBBa+CotUzAPf5b7YMdMR/8CQoeYE5LX3W4wj6RYTgonm1b9DA==",
       "dev": true,
       "license": "MIT",
-      "peer": true,
       "dependencies": {
         "esbuild": "^0.27.0",
         "fdir": "^6.5.0",
@@ -6718,7 +6709,6 @@
       "integrity": "sha512-FQMeF0DJdWY0iOnbv466n/0BudNdKj1l5jYgl5JVTwjSsZSlqyXFt/9+1sEyhR6CLowbZpV7O1sCHrzBhucKKg==",
       "dev": true,
       "license": "MIT",
-      "peer": true,
       "dependencies": {
         "@vitest/expect": "4.0.17",
         "@vitest/mocker": "4.0.17",
@@ -6996,7 +6986,6 @@
       "resolved": "https://registry.npmjs.org/ws/-/ws-8.19.0.tgz",
       "integrity": "sha512-blAT2mjOEIi0ZzruJfIhb3nps74PRWTCz1IjglWEEpQl5XS/UNama6u2/rjFkDDouqr4L67ry+1aGIALViWjDg==",
       "license": "MIT",
-      "peer": true,
       "engines": {
         "node": ">=10.0.0"
       },
@@ -7068,7 +7057,6 @@
       "resolved": "https://registry.npmjs.org/zod/-/zod-4.3.5.tgz",
       "integrity": "sha512-k7Nwx6vuWx1IJ9Bjuf4Zt1PEllcwe7cls3VNzm4CQ1/hgtFUK2bRNG3rvnpPUhFjmqJKAKtjV576KnUkHocg/g==",
       "license": "MIT",
-      "peer": true,
       "funding": {
         "url": "https://github.com/sponsors/colinhacks"
       }
diff --git a/ts-packages/quarto-sync-client/src/client.test.ts b/ts-packages/quarto-sync-client/src/client.test.ts
new file mode 100644
index 00000000..859201f7
--- /dev/null
+++ b/ts-packages/quarto-sync-client/src/client.test.ts
@@ -0,0 +1,205 @@
+/**
+ * Tests for createSyncClient identity handling.
+ *
+ * Regression test: identity must be written to the index document
+ * regardless of peer connection status. A prior bug gated identity
+ * writes behind an `isOnline` check, which always failed because
+ * the peer timeout was 1ms.
+ */
+
+import { describe, it, expect, vi, beforeEach } from 'vitest';
+import type { DocumentId } from '@automerge/automerge-repo';
+
+// Track calls to setIdentity
+const setIdentitySpy = vi.fn();
+
+// ── Mocks ──────────────────────────────────────────────────────────────
+
+vi.mock('@automerge/automerge', () => ({
+  clone: vi.fn((doc: unknown) => structuredClone(doc)),
+  from: vi.fn((val: unknown) => structuredClone(val)),
+  save: vi.fn(() => new Uint8Array(0)),
+}));
+
+vi.mock('@automerge/automerge-repo-network-websocket', () => ({
+  BrowserWebSocketClientAdapter: vi.fn(),
+}));
+
+vi.mock('@automerge/automerge-repo-storage-indexeddb', () => ({
+  IndexedDBStorageAdapter: vi.fn(),
+}));
+
+// Mock setIdentity so we can assert it was called
+vi.mock('@quarto/quarto-automerge-schema', async (importOriginal) => {
+  const original = await importOriginal<typeof import('@quarto/quarto-automerge-schema')>();
+  return {
+    ...original,
+    setIdentity: (...args: unknown[]) => {
+      setIdentitySpy(...args);
+      return original.setIdentity(...(args as Parameters<typeof original.setIdentity>));
+    },
+  };
+});
+
+/**
+ * Create a mock DocHandle that stores its document in-memory.
+ */
+function createMockHandle<T>(initialDoc: T): {
+  handle: { doc: () => T; change: (fn: (d: T) => void) => void; on: () => void; off: () => void; documentId: string; whenReady: () => Promise<void>; update: (fn: (d: T) => T) => void };
+  getDoc: () => T;
+} {
+  let current = structuredClone(initialDoc);
+  const handle = {
+    documentId: 'mock-doc-id' as DocumentId,
+    doc: () => current,
+    change: (fn: (d: T) => void) => {
+      const draft = structuredClone(current);
+      fn(draft);
+      current = draft;
+    },
+    update: (fn: (d: T) => T) => {
+      current = fn(structuredClone(current));
+    },
+    on: vi.fn(),
+    off: vi.fn(),
+    whenReady: () => Promise.resolve(),
+  };
+  return { handle, getDoc: () => current };
+}
+
+// Mock Repo — never emits 'peer', so waitForPeer always times out
+vi.mock('@automerge/automerge-repo', async (importOriginal) => {
+  const original = await importOriginal<typeof import('@automerge/automerge-repo')>();
+  return {
+    ...original,
+    Repo: vi.fn(),
+    // Keep real URL helpers
+    generateAutomergeUrl: original.generateAutomergeUrl,
+    parseAutomergeUrl: original.parseAutomergeUrl,
+  };
+});
+
+import { Repo } from '@automerge/automerge-repo';
+import { createSyncClient } from './client.js';
+import type { SyncClientCallbacks } from './types.js';
+import type { IndexDocument } from '@quarto/quarto-automerge-schema';
+
+/** Minimal no-op callbacks. */
+function noopCallbacks(): SyncClientCallbacks {
+  return {
+    onFileAdded: vi.fn(),
+    onFileChanged: vi.fn(),
+    onBinaryChanged: vi.fn(),
+    onFileRemoved: vi.fn(),
+    onFilesChange: vi.fn(),
+    onIdentitiesChange: vi.fn(),
+    onConnectionChange: vi.fn(),
+    onError: vi.fn(),
+  };
+}
+
+/**
+ * Install a mock Repo that never connects to a peer.
+ * - `find()` returns `connectHandle` (for `connect` flow)
+ * - `import()` returns `createHandle` (for `createNewProject` flow)
+ * - `create()` returns `createHandle`
+ * - networkSubsystem never emits 'peer', so `waitForPeer` always times out
+ */
+function installMockRepo(
+  connectHandle: ReturnType<typeof createMockHandle>['handle'],
+  createHandle: ReturnType<typeof createMockHandle>['handle'],
+) {
+  const mockNetworkSubsystem = {
+    on: vi.fn(),
+    off: vi.fn(),
+  };
+
+  // Repo is called with `new`, so the mock must be a constructor
+  vi.mocked(Repo).mockImplementation(function (this: unknown) {
+    Object.assign(this as Record<string, unknown>, {
+      find: vi.fn().mockResolvedValue(connectHandle),
+      import: vi.fn().mockReturnValue(createHandle),
+      create: vi.fn().mockReturnValue(createHandle),
+      networkSubsystem: mockNetworkSubsystem,
+    });
+    return this as Repo;
+  } as unknown as typeof Repo);
+}
+
+describe('createSyncClient identity', () => {
+  beforeEach(() => {
+    vi.clearAllMocks();
+  });
+
+  it('connect writes identity even when peer connection times out', async () => {
+    const indexDoc: IndexDocument = { files: {}, version: 1, identities: {} };
+    const { handle, getDoc } = createMockHandle(indexDoc);
+
+    installMockRepo(handle, handle);
+
+    const cbs = noopCallbacks();
+    const client = createSyncClient(cbs);
+
+    await client.connect(
+      'ws://localhost:9999',
+      'mock-doc-id',
+      'actor-123',
+      'Alice',
+      '#FF0000',
+    );
+
+    // Identity must have been written
+    expect(setIdentitySpy).toHaveBeenCalledWith(
+      expect.anything(),
+      'actor-123',
+      'Alice',
+      '#FF0000',
+    );
+
+    // Verify the document was actually mutated
+    const doc = getDoc();
+    expect(doc.identities?.['actor-123']).toEqual({
+      name: 'Alice',
+      color: '#FF0000',
+    });
+  });
+
+  it('createNewProject writes identity even when peer connection times out', async () => {
+    const indexDoc: IndexDocument = { files: {}, version: 1, identities: {} };
+    const { handle, getDoc } = createMockHandle(indexDoc);
+
+    installMockRepo(handle, handle);
+
+    const cbs = noopCallbacks();
+    const client = createSyncClient(cbs);
+
+    // Use resolveActorId callback (mirrors App.tsx which passes actorId=undefined)
+    const resolveActorId = vi.fn().mockResolvedValue('actor-456');
+
+    await client.createNewProject(
+      { syncServer: 'ws://localhost:9999', files: [] },
+      undefined,    // actorId — App.tsx passes undefined
+      'Bob',
+      '#00FF00',
+      resolveActorId,
+    );
+
+    // resolveActorId must be called regardless of connection status
+    expect(resolveActorId).toHaveBeenCalled();
+
+    // Identity must have been written
+    expect(setIdentitySpy).toHaveBeenCalledWith(
+      expect.anything(),
+      'actor-456',
+      'Bob',
+      '#00FF00',
+    );
+
+    // Verify the document was actually mutated
+    const doc = getDoc();
+    expect(doc.identities?.['actor-456']).toEqual({
+      name: 'Bob',
+      color: '#00FF00',
+    });
+  });
+});
diff --git a/ts-packages/quarto-sync-client/src/client.ts b/ts-packages/quarto-sync-client/src/client.ts
index 48f96a3a..da4c73f1 100644
--- a/ts-packages/quarto-sync-client/src/client.ts
+++ b/ts-packages/quarto-sync-client/src/client.ts
@@ -364,18 +364,14 @@ export function createSyncClient(callbacks: SyncClientCallbacks, astOptions?: AS
         );
       }
 
-
-
-      // Only attempt to modify documents if we're online (to avoid conflicts)
-      if (isOnline) {
-        // Migrate schema and sync identity
-        indexHandle.change(d => {
-          migrateIndexDocument(d);
-          if (actorId && screenName) {
-            setIdentity(d, actorId, screenName, color || '');
-          }
-        });
-      }
+      // Migrate schema and sync identity.
+      // Always write locally — Automerge will sync when the peer connects.
+      indexHandle.change(d => {
+        migrateIndexDocument(d);
+        if (actorId && screenName) {
+          setIdentity(d, actorId, screenName, color || '');
+        }
+      });
 
       const currentDoc = indexHandle.doc()!;
       const files = getFilesFromIndex(currentDoc);
@@ -721,8 +717,7 @@ export function createSyncClient(callbacks: SyncClientCallbacks, astOptions?: AS
       const indexUrl = generateAutomergeUrl();
       const { documentId: indexDocId } = parseAutomergeUrl(indexUrl);
 
-      // Only resolve actor ID from server if we're online
-      const resolvedActorId = isOnline && resolveActorId
+      const resolvedActorId = resolveActorId
         ? (await resolveActorId(indexDocId)) ?? undefined
         : actorId;
       state.actorId = resolvedActorId ?? null;