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Summary 1.The concept that animals benefit from gaining familiarity with physical spaces is widespread among ecologists and constitutes a theoretical pillar in studies of territory defence, philopatry and habitat selection. Yet proximate causes and fitness benefits of site familiarity are poorly known. 2. We used data from marked common loons Gavia immer breeding on 98 territories over 14 years to investigate the 'win-stay, lose-switch rule' for nestsite placement (if eggs hatch, reuse nestsite; if predator takes eggs, move nestsite). Males controlled nest placement in this species: pairs used the rule if both members remained the same from the previous nesting attempt or if only the male remained the same but not if only the female remained the same. 3. By means of the nesting rule, male common loons benefited from site familiarity, increasing nesting success by 41% between their first and third years on a territory. In contrast, females exhibited no increase in nesting success with increased territorial tenure. 4. Owing to site familiarity, a male loon competing for a breeding territory faces a considerable 'familiarity deficit' compared with the male breeder already established there. The familiarity deficit probably explains why resident animals often fight hard to retain familiar territories, when challenged, and why animals of many species tend to remain on familiar territories rather than moving when territories of higher intrinsic quality become available nearby.